A Solar Power Purchase Agreement (PPA) is a financial agreement in which a developer arranges for the design, approval, financing and installation of a solar system on a customer`s property at little or no cost. The developer sells the electricity produced to the host customer at a fixed price, which is usually lower than the retail price of the local utility. This lower electricity price is used to offset the customer`s purchase of electricity from the grid, while the developer receives revenues from these electricity sales, as well as tax credits and other system incentives. PPAs are typically between 10 and 25 years old and the developer remains responsible for the operation and maintenance of the system for the duration of the agreement. At the end of the PPA contract term, a customer may be able to extend the PPA, ask the developer to remove the system, or purchase the solar energy system from the developer. PPAs avoid the initial investment costs associated with installing a solar PV system and simplify the process for the host customer. However, in some states, the PPA model faces regulatory and legislative challenges that developers would regulate as an electric utility. A solar lease is another form of third-party financing that is very similar to a PPA but does not involve the sale of electricity. Instead, customers rent the system like an automobile. In both cases, the system is owned by a third party, while the guest customer enjoys the benefits of solar energy with little or no upfront cost. These third-party financing models have quickly become the most popular method for customers to reap the benefits of solar energy.

Colorado, for example, first entered the market in 2010, and by mid-2011, third-party installations accounted for more than 60 percent of all residential installations, rising to 75 percent in the first half of 2012. This upward trend is evident in all countries that have introduced third-party financing models. In this context, the Commission found that MSEDCL had identified a rate of ₹4.75 (~$0.065)/kWh and had therefore adopted in its decisions of 22 July 2019 and 19 September 2019 in two other cases for the purchase of electricity from new bagasse-based cogeneration plants for a 20-year PPA period. As a result, the Commission had not adopted a tariff determined by calls for tenders for new bagasse power stations. As a result, the ₹4.75 (~$0.065)/kWh tariff adopted in its previous ordinances has become the benchmark rate to supplement PPAs with new bagasse-based electricity projects. Following the commitment of 1,000 MW of solar power of Rs 2.71 and Rs 2.72 per unit in 2018, Maharashtra State Electricity Distribution Co Ltd (MSEDCL) will now sign power purchase agreements (. MSEDCL has signed a long-term Power Purchase Agreement (EPA) for a capacity of 2 000 MW with bagasse-based cogeneration projects until the financial year 2016-17 at a preferential rate set by the Commission. At the end of the 2019-2020 fiscal year, MSEDCL had a cumulative deficit of MU 6,109 in the non-solar category. The purchase of electricity from new bagasse-based cogeneration projects would have helped to cover the deficit.

The Commission asked DISCOM to rule against the tendering procedure. MSEDCL responded that it had proposed a supply memorandum of understanding for new bagasse-based energy projects to comply with the state government`s 2020 renewable energy policy. A large number of solar equipment suppliers and manufacturers have called on the Maharashtra Electricity Regulatory Commission (MERC) to abolish the grid support fee (GSC) proposed by MSEDCL for solar roof consumers. Vanamati Hall, where the Commission held a public hearing on MSEDCL. Former Energy Minister Chandrashekhar Bawankule had set MSEDCL (Maharashtra State Electricity Distribution Company Limited) the goal of installing a Lakh solar park pump under Mukhyamantri Saur Krishi Yojana (MSKY) by March 2020. So far, it could be installed. Earlier, Mercom reported that MERC had issued an order ordering MSEDCL to purchase electricity from a 50 MW bagasse-based cogeneration project at prices determined by tenders after its EPA expired. In a recent order, the Maharashtra Electricity Regulatory Commission (MERC) authorized Maharashtra State Electricity Distribution Company Limited (MSEDCL) to enter into a Power Purchase Agreement (PPA) under the Memorandum of Understanding (MoU) with bagasse-based cogeneration projects at a rate of ₹4.75 (~$0.065)/kWh for 20 years.

With regard to the issue of electricity supply through the Memorandum of Understanding, the Commission stated that the Electricity Act 2003 allows for two ways of supplying electricity by distribution licensees. One is under the Memorandum of Understanding, where the Commission sets the tariff, and the other when the tariff is discovered through calls for tenders. As regards the tariff at which electricity supply should be authorised, the Commission stated that MSEDCL had proposed a tariff of ₹4.75 (~$0.065)/kWh for electricity supply based on a Memorandum of Understanding. Even as solar roof consumers celebrated the relief granted to them by the Maharashtra Electricity Regulatory Commission (MERC), MSEDCL dropped a bombshell. He has proposed astronomical grid support fees that will make solar power more expensive than its own energy. In order to achieve the non-solar target for the 2018-19 financial year, DISCOM, after approval by the Commission, signed a long-term power purchase agreement (EPA) under a tender procedure with bagasse-based cogeneration projects. . . . . .