The Karnataka Electricity Regulatory Commission (KERC) has ordered that Adani Green Energy Limited (AGEL) should get a refund of ₹1.2 million (~$15,754) from the Gulbarga Electricity Supply Company Limited (GESCOM) which was levied for a delay in submitting documentary evidence for a 20 MW solar project.

The amount was paid by Adani to GESCOM as the penalty for not producing the documentary evidence for the possession of land for the establishment of a 20 MW solar project in Mysuru.

Background

Adani Green had filed a petition saying that it was prevented from performing the obligations under the power purchase agreement (PPA) because of ‘force majeure’ events affecting it.

The respondents were Gulbarga Electricity Supply Company Limited (GESCOM), Karnataka Renewable Energy Development Limited (KREDL), Karnataka Power Transmission Corporation Limited (KPTCL), and the state of Karnataka.

KREDL had called for the Request for Proposal (RfP) for the development of 290 MW of solar projects to be implemented in 17 taluks on February 12, 2016.

AGEL was selected as the successful bidder for the development of a 20 MW solar project in Periyapatna taluk of Mysuru district. The tariff discovered was ₹4.93 (~$0.065)/kWh, and the letter of award was given on May 30, 2016.

Accordingly, AGEL and GESCOM entered into a PPA on June 29, 2016, and it was approved by the Commission on September 29, 2020. The approval of this PPA was subject to certain corrections and modifications to be incorporated in the PPA by entering into a supplemental PPA between the parties.

Later, the parties executed the supplemental PPA on December 26, 2016. However, Adani Green could not meet the deadline for providing the documents evidencing the clear title and the possession of the land required for the project.

GESCOM said that the developer had not fulfilled the conditions within eight months, and so, damages worth ₹1.2 million (~$15,754) would be levied as per the terms of the PPA.

Adani Green, in its reply, said that the reasons for the delay amounted to ‘force majeure’ events and stated that the GESCOM was not entitled to impose a penalty.

Adani Green said that the delay in submitting the documents was due to the lag in getting tentative evacuation authorization and approval under the Karnataka Land Reforms (KLR) Amendment Act, 2015.

The Commission noted that for establishing a solar power project, land should be available, and there should be an adequate facility for evacuating the power from the project to the nearest substation. The developer has to look for suitable land and confirm its availability before applying for evacuation approval. Therefore, the contention of AGEL that it had to search for the land-only after obtaining the evacuation approval was not correct.

But the Commission also mentioned that a 20 MW project needs about 100 acres of land. The petitioner had identified about 107.45 acres of land at the time of filing of the application, which was enough for the designated project development. So, Adani Green was not entitled to pay any damages.

The Commission asked GESCOM to refund ₹1.2 million (~$15,754) to AGEL within eight weeks from the date of this order. In the case of default, the amount will carry interest at the rate of 8% per year from the date of default until the date of payment.

In another petition filed for a similar project in Hassan district, KERC had dismissed AGEL’s request to approve the date on which the supplemental power purchase agreement was signed to be the effective date of the PPA.

According to Mercom’s India Solar Project Tracker, Karnataka has an installed large-scale solar capacity of over 7.3 GW, making it the leading solar state of the country.

Meanwhile, the state has extended the validity of the existing tariff structure determined by the Commission in August 2019. The earlier regulation had expired in April 2020. The extension has been provided for one year from April 01, 2020, to March 31, 2021. The extension will facilitate the seamless development of solar projects, including rooftop solar installations in the state.