Karnataka Electricity Regulator Reduces Tariff for a Delayed 10 MW Solar Project

The Karnataka Electricity Regulatory Commission (KERC) has dismissed a petition by Shorapur Solar Power Limited that argued its 10 MW solar project was delayed due to force majeure (unforeseeable) events.

Due to the delay, the Commission ordered that the petitioner is entitled to a tariff of ₹4.36 (~$0.061)/kWh in place of the originally agreed tariff of ₹5.13 (~$0.071)/kWh. The Commission also directed Shorapur Solar Power Private Limited to pay liquidated damages to Chamundeshwari Electricity Supply Corporation Limited (CESC) in line with the power purchase agreement (PPA).

Earlier, Shorapur Solar Power Limited had filed a petition requesting the Commission to declare that the scheduled commercial operation date be extended to the period corresponding to the time taken for the grant of the evacuation approval (142 days). It had also requested the Commission to put aside the demand issued by CESC for the payment of liquidated damages towards the delay in achieving the COD within the scheduled timeline.

Background


The Karnataka Renewable Energy Development Limited (KREDL) had invited requests for proposals for 1,200 MW of solar projects in 60 taluks. The parent company of Shorapur Solar Power Limited, Karvy Consultants Limited, had placed a bid for setting up 10 MW of solar power projects at Shorapur taluk in Yadgir district. The company entered into a PPA with CESC in 2016.

Shorapur Solar Power appointed a land aggregator to identify and acquire the land for the project at village Kembhavi. The company got the evacuation approval from Karnataka Power Transmission Corporation Limited (KPTCL) on March 30, 2017.

Shorapur Solar Power said that due to the delay in the grant of evacuation approval by KPTCL and consequent delay in land registration, the petitioner was prevented from fulfilling the conditions mentioned in the PPA.

The company informed CESC about the status of conditions in July 2017, but CESC refused to give time extension and issued a demand notice to pay the damages towards the non-fulfillment of conditions. It subsequently issued another demand notice asking for liquidated damages of ₹10 million (~$140,068).

On the other hand, CESC said that the PPA provided for a time-frame for achieving the COD, and the developer was required to satisfy the conditions within eight months from the effective date (by May 26, 2017).

Further, CESC noted that the delay in obtaining approvals could not be attributed to them. The circumstances cited by Shorapur Solar Power to be force majeure events do not fall under the purview of the definition of force majeure clause of the PPA.

To this, the Commission noted that there was a delay in obtaining the power evacuation approval from KPTCL and in producing the documentary evidence for having acquired the title and possession of the land acquired for the project. The Commission added that the draft was a part of the request for proposal, so the company had full knowledge of the various timelines prescribed in the PPA for the commissioning of the project.

The effective date of the approval of the PPA was September 27, 2016, and the project had to be commissioned within 12 months from the effective date.

The Commission noted that there was a delay of more than five months in applying for the evacuation approval, and the developer did not explain the delay.

The order added that the process of obtaining sale deeds, the litigations before the civil court, and the conversion order have not caused the delay in the execution and cannot be considered as force majeure events.

Regarding the tariff, the Commission stated that Shorapur Solar Power is not entitled to the tariff initially agreed in the PPA at the rate of ₹5.13 (~$0.071)/kWh as the project was not commissioned within the stipulated time. The PPA provides that the tariff on the date of the commercial operation will apply to the project. The project was commissioned on February 23, 2018, and, therefore, the petitioner’s project is entitled to a tariff of ₹4.36 (~$0.061)/kWh.

In October last year, KERC had ruled against a petition filed by the special purpose vehicles of SunEdison Energy requesting the extension of the scheduled commercial operation date for solar projects totaling 150 MW on the grounds of force majeure events.

Previously, the state commission also rejected a petition to extend the project commission date and set a tariff of ₹4.36 (~$0.061)/kWh for a 1 MW grid-connected solar project developed on a farmer-owned land in the state’s Kalaburagi district.

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