Karnataka Commission Penalizes Developer for Delayed 3 MW Solar Project

In its latest order, the Karnataka Electricity Regulatory Commission (KERC) has directed Megasun Solar Tech to furnish liquidated damages to the tune of ₹3 million ($42,967.71) to Gulbarga Electricity Supply Company Limited (GESCOM).

Megasun has to furnish the damages within a month, failing which its security deposit would be liable to be encashed by the GESCOM.

The petitioner- Megasun Solar is a special purpose vehicle (SPV) created by Microsun Solar Tech Pvt. Ltd. for the development of a 3 MW solar project in Gangavathi taluk of Koppal district in Karnataka.

Megasun Solar Tech had executed the power purchase agreement (PPA) with GESCOM on May 30, 2016, and the KERC approved it on September 29, 2016. As per the terms of the PPA, the solar power project should have achieved its scheduled commissioning date (SCD) on or before September 29, 2017 (within a year from the date of approval of the PPA).

Megasun was entitled to receive a tariff of ₹5.94 ($0.085)/kWh for the energy supplied by it to GESCOM, for 25 years from the commercial operation date (COD).

However, the SPV failed to achieve the commissioning by the stipulated deadline and later submitted before the KERC that it be given time until October 4, 2019, for achieving the commissioning of the project.

The KERC, while allowing the time, has imposed a lower tariff of ₹3.05 ($ 0.043)/kWh.

The commission has also directed the SPV and GESCOM to execute a supplemental PPA incorporating the terms of its order, within one month.

It also noted that if the SPV failed to achieve the commissioning within the date ordered, GESCOM would be free to terminate the PPA, subject to the issuance of a default notice.

KERC has a history of penalizing the developers for delayed commissioning of solar projects.

A few months ago, the state commission had asked another project developer to pay for the damages for a delay in commissioning.

In a similar case, KERC penalized Marakka Solar Power Project LL.P for the delay in commissioning a 1 MW project.

KERC also dismissed a petition by Emmvee Photovoltaic Power Private Limited, stating that the solar power developer is not entitled to the relief due to project commissioning delay which resulted in a 30 percent tariff reduction for the developer.

A rooftop project commissioning delay in another case in front of KERC cost the installer a 36 percent reduction in tariff.