The Central Electricity Regulatory Commission (CERC) rejected a plea by Vaayu Renewable Energy Private Limited, a renewable energy developer, who filed a petition seeking for the commission to direct the Power Grid Corporation of India Limited (PGCIL) to refrain from encashing a bank guarantee for a project that could not achieve financial closure on time.

In its petition, Vaayu stated that the government did not allot the revenue land. This was beyond its control and Vaayu cited this as the reason why it was unable to comply with the time frame for the achievement of the financial closure of three wind generation projects in Gujarat.

The projects included a 300 MW wind generation project at Rohasumri, a 250 MW wind project at Meghpar, and a 300 MW wind arm and generation project at Ratidya, all in the Kutch district of Gujarat. Vaayu had furnished a bank guarantee of ₹50 million (~₹705,897) for each project.

The contract had specified that the financial closure must be achieved within nine months from the grant of stage-II connectivity clearance. The developer’s petition had also cited the New Land Policy issued by the government of Gujarat also impeded progress by putting a restriction on revenue lands for wind farm projects smaller than 1000 MW in size.

The petitioner stated that this left them in a tough situation, especially after making a substantial investment in the acquisition of more than 50% of the land required for its projects. It said that it was not in a position to acquire private land either because of other developers being allotted revenue lands in the same vicinity.

It explained that both projects could not co-exist without proper availability of wind velocity as per micro siting guidelines issued by the Ministry of New and Renewable Energy (MNRE).

Vaayu further noted that projects in the Bhuj area that are being developed by winners of auctions by Solar Energy Corporation India (SECI), Gujarat Urja Vikas Nigam Limited (GUVNL) and wind turbine manufacturers are allotted revenue lands on priority.

It submitted that because of these reasons, they have been unable to implement the projects and have been left with no choice by to surrender connectivity altogether and sought for the return of furnished bank guarantees.

In its response, the PGCIL said the petitioner was allowed to retain its stage-II connectivity clearance despite not having complied with the requirements of the contract, including adhering to the timelines. It said this would affect the rights of other eligible and capable entities to claim priority in terms of bay allocation.

In its order, the Commission allowed the PGCIL to encash the connectivity bank guarantee. It dismissed Vaayu’s request explaining that it had acquired more than 50% of the land required for the projects before the New Land Policy was implemented and that acquiring private land was still a feasible option.

The CERC explained that the bank guarantee could only be encashed in case the stage-II connectivity grantee failed to complete the dedicated transmission line within 24 months from the date of bay allocation for the project. But in this case, the developer has submitted that they cannot complete the project and are surrendering connectivity. So, without waiting for 24 months, PGCIL can encash the bank guarantee.

The commission subsequently revoked the developer’s stage-II connectivity clearance citing its failure to achieve financial closure within the specified timeline.

Recently, Mercom reported that the CERC ordered that the stage II connectivity of ReGen Wind Farm should be revoked. The wind farm had asked for an extension of the timeline for filing the documentation required in line with the detailed procedure. In its order, the Commission also directed the central transmission utility to allocate the bays allotted to it to other applicants.

Earlier, the Commission had also directed the CTU to revoke the stage-II connectivity of Toramba Renewable Energy. It also asked the CTU to return the bank guarantee to the company within ten days from the issue of the order. Toramba Renewable Energy was developing a 300 MW wind generation project at Horti in Osmanabad, Maharashtra.