The Karnataka Electricity Regulatory Commission (KERC) has issued an order directing the Mangalore Electricity Supply Company Limited (MESCOM) to refund a penalty of ₹1.2 million (~$15,950) to Adani Green Energy Limited (AGEL).

The penalty was levied on AGEL by MESCOM for not producing the documentary evidence for land possession for setting up a 20 MW solar project in Malur taluk of Kolar district in the state. The company had filed a petition stating that it could not perform its obligations under the power purchase agreement (PPA) because of ‘force majeure’ events.

Background

On February 12, 2016, Karnataka Renewable Energy Development Limited (KREDL) had issued a Request for Proposal (RfP) for 290 MW of solar projects to be implemented in 17 taluks in Karnataka. AGEL won 20 MW of solar projects in the auction.

Following this, AGEL and MESCOM entered into a PPA on June 29, 2016, and the Commission approved this on October 19, 2020. AGEL was expected to commission the project within 12 months. The PPA had also specified certain conditions to be fulfilled by the company within eight months. The parties executed a supplemental PPA on December 26, 2016.

AGEL, however, could not meet the deadline for furnishing documents showing the clear title and the possession of the land required for the project.

Subsequently, MESCOM said that since AGEL had not fulfilled the conditions within the specified eight months, damages worth ₹1.2 million (~$15,950) would be levied as per the terms of the PPA.

To this, AGEL responded, stating that the reasons for the delay amounted to ‘force majeure’ events and stated that the MESCOM was not entitled to impose a penalty.

The company explained that documents were delayed because of delays in getting tentative evacuation authorization and approval under the Karnataka Land Reforms (KLR) Amendment Act, 2015.

In its analysis, 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, AGEL’s contention that it had to search for the land-only after obtaining the evacuation approval cannot be accepted.

However, the Commission also noted that a 20 MW project needs about 100 acres of land and that the petitioner had identified about 107.45 acres of land at the time of filing of the application. It declared that since this was enough for the project, Adani Green was not entitled to pay any damages.

In its order, the Commission asked MESCOM to refund ₹1.2 million (~$15,950) to AGEL within eight weeks from the date of its order. In the case the payment is not made, they will be penalized at a rate of 8% per year until the date of payment.

Recently, in a similar order, the KERC passed a similar order saying that AGEL should get a refund of ₹1.2 million (~$15,950) from the Gulbarga Electricity Supply Company Limited, which was levied for a delay in submitting documentary evidence for a 20 MW solar project.

In another petition filed for a similar project in Hassan district, the 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.