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Power Perspective Portal

State Overview: Maharashtra

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Maharashtra’s power sector development over the last two decades have been marked by several novel and innovative approaches to address critical issues in the sector. The sector is reaping the benefits of policy measures in the past particularly with respect to village and rural electrification, renewable energy development, investment in networks, feeder separation and regular revision of tariffs.

However, sector progress has also been affected by issues related to power procurement planning and capacity addition, fuel availability and operational performance of thermal generators, setbacks in power procurement via competitive bidding, veracity of agricultural demand estimation, especially unmetered demand and accountability for distribution costs. Due to these challenges, the utility is unable to provide supply at competitive rates, especially with the availability of low cost renewable energy sources as an alternative option to meet demand. Given Maharashtra’s significant industrial base, it has also been at the forefront of burgeoning sales migration due to open access, captive and rooftop options. The state has also been witnessing to several ways to slow the growth of sales migration and address the challenge of shrinking cross subsidy revenue.

Maharashtra's experiments with parallel licensing in Mumbai, franchisee adoption in high loss urban areas though not successful in increasing retail competition or increasing operational efficiency respectively, offer broader policy lessons and highlight the role of regulatory and policy oversight.

Having said that the state has also been pioneering in many bold and innovative approaches that need to be studied from a sector development and reform perspective. Some of these include:

  • The Load shedding protocol and Pune model approaches to sharing power shortages.
  • The efforts to restate agricultural demand based on scientific and rigorous methodology, particularly the recent restatement based on the report of the independent working group for agricultural consumption study.
  • Solarisation of agricultural feeders under the Mukhyamantri Saur Krushi Vahini Yojana (MSKVY) since June 2017.
  • Assessment and reduction of thermal, state-owned generating capacity in the pipeline based on changing demand and supply scenario.
  • Creating frameworks to manage risks from sales migration while promoting competition and investments via decentralized, kW scale solar.
  • Specifying perhaps the highest RPO target in the country as of date at 25% by FY25.

Many of these approaches were possible due to forward looking action by the regulatory commissions which was fueled by transparent and consultative processes and informed participation before the regulatory commission. However, over time, there was many examples to show that such avenues for participative decision making before regulatory commissions have been abandoned.

This overview explores critical highlights of power sector development in Maharashtra while highlighting the challenges and critical trends that will define the sector in the future. It is yet to be seen if decision makers in the states would be able to steer the impending technology-driven transition in the sector in a direction that minimizes costs, fosters innovation and reduces resource lock-ins and time intensive litigation in the sector. The full overview can be read here.