The Appellate Tribunal for Electricity (APTEL) has rejected ReNew Naveen Urja’s petition for interim relief against the Central Electricity Regulatory Commission’s (CERC) order adopting the tariff for its wind project.

ReNew Naveen Urja had requested a stay on the CERC order, citing procedural irregularities in Solar Energy Corporation of India’s (SECI) bidding process. However, APTEL dismissed the petition because ReNew Naveen Urja failed to demonstrate irreparable injury, and the balance of convenience did not favor halting SECI’s actions, including the potential invocation of bank guarantees.

Background

ReNew Naveen Urja participated in a competitive bidding process initiated by SECI to procure 1,200 MW of wind power. The appellant was awarded a contract to develop a 297.5 MW wind power project (later increased to 300 MW).

A Power Purchase Agreement (PPA) was signed between ReNew Naveen Urja and SECI for a 25-year term at a tariff of ₹2.69 (~$0.032)/kWh, with the scheduled commissioning date set for December 30, 2023. However, the project soon encountered issues when SECI delayed submitting the petition to the CERC for tariff adoption. This led to delays and triggered legal challenges from ReNew Naveen Urja.

The dispute primarily centers on the following:

Delay in Tariff Adoption: SECI did not file the petition for tariff adoption until November 16, 2022, well beyond the timeline mandated in the PPA. According to ReNew Naveen Urja, this delay (139 days) pushed back critical milestones such as financial closure and project commissioning, making the project financially unviable at the agreed tariff rate.

Deviation from Government Guidelines: ReNew Naveen Urja argued that SECI’s competitive bidding process violated government guidelines for tariff discovery. Specifically, the developer claimed that SECI made unauthorized changes to the bidding process, particularly regarding the “Change in Law” clause, without seeking approval from the regulator. The approval was obtained post-facto from MNRE, a deviation that ReNew Naveen Urja deemed legally impermissible.

Legal and Financial Ramifications: The appellant contended that its ability to achieve financial closure and commission the project within the agreed timelines was compromised. Failure to meet these obligations could result in SECI terminating the PPA, leading to severe financial penalties such as the encashment of bank guarantees and potential blacklisting from future bids.

Faced with these issues, ReNew Naveen Urja filed an application with APTEL seeking a stay of CERC’s order dated March 9, 2024, which adopted the tariff. The appellant sought interim relief, arguing that the bidding process was fraught with legal infirmities and that SECI should not be allowed to enforce the PPA or take coercive actions, including invoking bank guarantees.

SECI argued that ReNew Naveen Urja’s request for interim relief was unfounded. It contended that SECI had already filed an application before CERC seeking discharge from its obligations under the PPA. Thus, any delay or potential contract termination resulted from ReNew Naveen Urja’s actions.

SECI argued that the appellant was using the legal proceedings to avoid financial penalties, particularly the encashment of bank guarantees. It argued that the project delays were being addressed, and the timeline extensions granted by CERC for tariff adoption and financial closure were reasonable under the circumstances.

Tribunal’s Analysis

The Tribunal agreed that ReNew Naveen Urja had a prima facie case, acknowledging deviations from standard bidding guidelines during the competitive process. However, it noted that the appellant had participated in the bidding process without raising any objections and only voiced concerns after substantial delays.

APTEL found that the balance of convenience did not favor the appellant. ReNew Naveen Urja had already signed the PPA, and SECI had not yet taken any drastic steps, such as terminating the agreement or invoking bank guarantees. It concluded that the potential financial penalties were standard contractual risks and did not justify granting interim relief.

APTEL rejected the claim of irreparable injury, emphasizing that if SECI did invoke the bank guarantee, the appellant could seek compensation through future legal proceedings. As the harm caused by invoking the guarantee could be compensated, it did not see grounds for preventing SECI from taking such action.

The Tribunal dismissed ReNew Naveen Urja’s request for interim relief. It ruled that SECI had the right to invoke the bank guarantee if necessary, and ReNew Naveen Urja would not suffer irreparable harm if this occurred. The Tribunal emphasized that any invocation of the bank guarantee would be subject to the outcome of the main appeal, ensuring that if ReNew Naveen Urja succeeded in the broader case, it could recover any funds through subsequent legal action.

In January, APTEL upheld the Rajasthan Electricity Regulatory Commission’s decision dismissing a similar petition filed by a wind energy generator, contending that regulations should not retroactively impact PPA.

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