Commission Upholds Force Majeure Plea, Grants Extension to a 10 MW Solar Project

The Maharashtra Electricity Regulatory Commission (MERC) allowed the scheduled commissioning date of a 10 MW solar project in Maharashtra to be extended to the actual commissioning date due to the ‘force majeure’ event of the non-availability of evacuation infrastructure.

The Commission directed the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to refund ₹3.11 million (~$41,966) of the solar developer’s bank guarantee along with the carrying cost within a month.

MERC also asked MSEDCL to augment the power transformer at the 33/11 kV Bodhadi substation within six months.

Atnu Solar Power had filed a petition seeking an extension of the scheduled commercial operation date of its 10 MW solar power project in the Nanded district of Maharashtra from December 1, 2020, to the actual commercial operation date (January 28, 2021).


Background

As per the power purchase agreement (PPA) signed on December 27, 2018, Atnu Solar Power was required to commission the project within 13 months. However, the commissioning was delayed due to the outbreak of the Covid-19 pandemic. Atnu Solar Power applied for an extension of the scheduled commercial operation date until December 31, 2020.

The project was commissioned on January 28, 2021, resulting in a delay of 28 days. MSEDCL unconditionally accepted the commissioning of the project.

On March 3, 2021, MSEDCL granted the scheduled commercial operation date extension to December 31, 2020. However, it categorically rejected the extension claim from December 31, 2020, to January 28, 2021, despite the delay being attributable solely to MSEDCL.

The solar developer argued that MSEDCL had levied liquidated damages even though the delay was caused by MSEDCL’s failure to provide permission to synchronize the project to the grid.

MSEDCL, in its submission, said that Atnu Solar Power had failed to achieve financial closure and the scheduled commercial operation date as stipulated in the PPA. As a result, it was within its rights to invoke the performance bank guarantee.

MSEDCL argued that the developer knew that the power transformer at the Bodhadi substation was underrated, i.e., 8.15 MVA instead of 10 MVA. Even though it was aware of the technical constraint at the location, it had accepted full responsibility for the condition.

The DISCOM said that the project was commissioned as soon as Atnu Solar Power complied with the requirements. As the developer submitted all the documents only on January 27, 2021, it was not entitled to an extension until the actual date of commissioning.

Commission’s analysis

The Commission observed that there had been a delay in the commissioning of the project. The first delay was from January 27, 2020, to December 31, 2020, and the second was from December 31, 2020, to January 28, 2021. MSEDCL had accorded its consent to extend the scheduled commercial operation date up to December 31, 2020.

The Commission noted that Atnu Solar Power had requested MSEDCL to augment the 33/11 kV Bodhadi substation transformer, a pre-requisite for project commissioning. The onus of augmenting the transformer was on MSEDCL.

Even though the solar developer could commission the project on time, MSEDCL was not ready with evacuation infrastructure. Hence, MSEDCL was clearly at fault.

The Commission held that the developer’s project under consideration was affected by the ‘force majeure’ event of non-availability of evacuation infrastructure.

It ruled that liquidated damages should not be levied for the period of delay. It directed MSEDCL to refund the forfeited amount of ₹3.11 million (~$41,966) along with carrying cost within a month.

It also directed MSEDCL to execute the transformer augmentation works within six months and report the compliance.

In March this year, MERC dismissed ACME Solar’s plea for the return of the performance bank guarantee. It said that the PPA specified conditions for the return of the performance bank guarantee.

Earlier, MERC had exempted ACME Heergarh Powertech Private from its contractual obligations under the ‘force majeure’ provision of its PPA with MSEDCL.

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