APTEL Quashes MSEDCL’s 2 GW/4 GWh BESS Tender Over Material Post-Bid Changes

On June 5, 2026, the Appellate Tribunal for Electricity (APTEL) set aside the Maharashtra Electricity Regulatory Commission’s (MERC) tariff adoption order regarding the Maharashtra State Electricity Distribution Company Limited (MSEDCL) 2,000 MW / 4,000 MWh Battery Energy Storage System (BESS) procurement. The tribunal quashed the competitive bidding process and invalidated the regulatory approval previously granted for the discovered tariffs.

Post-Bid Chronology and Technical Requirement Shift

The technical bids for the tender were opened on November 3, 2025, and MSEDCL conducted the reverse e-auction on November 5, 2025. Following the discovery of tariffs in this auction, the Ministry of Power (MoP) issued a communication on December 31, 2025. This intervention introduced a change in technical requirements after the financial offers had been submitted and evaluated.

The conflict involved the following shift in operational parameters:

• Original RfS and BESPA Terms: Bids were structured on a single-cycle-per-day operation, equating to approximately 5,475 total cycles over the 15-year contract term.
• MoP Condition (December 31, 2025): The Ministry stipulated that MSEDCL must retain a contractual right to utilize the systems for at least 6,300 cycles during the project tenure without additional payment.

Participating bidders argued that this modification altered the project’s commercial assumptions, specifically regarding battery degradation risks and the requirement for additional capital expenditure for battery augmentation. Bidders also stated the change created uncertainty regarding eligibility for Viability Gap Funding (VGF) support, which is capped at ₹18 lakh per MWh.

Technical Context of the Ministry of Power Condition

The MoP’s 6,300-cycle condition was based on the rationale of avoiding “sub-optimal utilization” of assets. The Ministry noted that commercially available Lithium Iron Phosphate (LFP) batteries typically support approximately 8,000 cycles. Under the original single-cycle-per-day regime, only 4,200 to 5,475 cycles would be utilized over the contract period, which the MoP determined was inefficient for assets paid for by the utility. However, the tribunal found that the imposition of this condition after the conclusion of bidding was legally impermissible.

Tribunal Findings: Sanctity of the Competitive Process

APTEL’s legal reasoning for quashing the procurement focused on the finding that the MoP’s December 31, 2025, communication was a substantive departure from the framework on which bids were submitted.

The tribunal’s findings included:

1. The post-bid modification violated established principles of fair and transparent competitive bidding by introducing new conditions after the discovery of the ₹1,65,998 per MW per month tariff.
2. The additional cycle requirement “changed the rules of the game” after the conclusion of the auction.
3. MSEDCL’s undertaking to provide compensation for any potential loss of VGF lacked regulatory approval and was not legally enforceable.

The tribunal clarified that while labeled a “contractual right” rather than a mandatory obligation, the provision created a latent liability that altered the commercial integrity of the original bids.

Directives to MSEDCL and Legal Remedies

Following the quashing of the tender, APTEL issued the following mandates to MSEDCL:

• LoI Cancellation: All Letters of Intent (LoI) issued under the 2,000 MW / 4,000 MWh tender are formally quashed.
• Return of Securities: MSEDCL is directed to return all bank guarantees and security deposits to the appellants.
• Timeline: The return of all financial securities must be completed within exactly four weeks from the date of the judgment.

Profile of Appellants and Final Allocation

The appeal process involved a batch of appeals led by Appeal No. 220 of 2026. The following table identifies the Appellants:

Prior to the tribunal’s intervention, the final 2,000 MW allocation at the discovered tariff of ₹1,65,998 per MW per month was distributed among the following successful bidders: