Karnataka Commission Asks Kodangal Solar Park to Compensate for Commissioning Delay

The Karnataka Electricity Regulatory Commission (KERC) has dismissed Marikal Solar Parks Private Limited’s request to approve the date on which the second supplemental power purchase agreement (SPPA) was signed as the effective date of the power purchase agreement (PPA) for a 20 MW solar project.

The PPA was signed between Marikal Solar Parks Private Limited and the Bangalore Energy Supply Company Limited (BESCOM) on June 02, 2016.

The petitioner (Kodangal Solar Parks) submitted that the second SPPA was executed on September 06, 2017, and the Commission approved it on October 10, 2017.

The Commission had also stated that the petitioner had failed to produce documentary evidence of the possession of the project land on time.

Earlier, Kodangal Solar Parks Private Limited, a special purpose vehicle of the Marikal Solar Parks Private Limited, had filed a petition requesting the Commission to declare the effective date as the date on which the second supplementary agreement was signed. It had also requested the Commission to consider that the delay in the commissioning of the project was due to force majeure (unforeseeable) events.


The Karnataka Renewable Energy Development Limited (KREDL) had called for the Request for Proposal (RfP) on November 11, 2015, for the development of solar PV ground-mounted power projects in 60 taluks of Karnataka. Marikal Solar Parks was the successful bidder to develop a 20 MW solar project at Basavana Bagevadi taluk. The tariff discovered was ₹5.48 (~$0.074)/kWh.

The petitioner, an SPV of Marikal Solar Parks Private Limited, executed the PPA dated June 02, 2016, with BESCOM, and the Commission approved the PPA. The second supplementary agreement was signed between the parties on January 17, 2017, and was approved by the Commission on October 10, 2017. The petitioner developed and commissioned the project on January 05, 2018.

The petitioner said that there was an inordinate delay in the issuance of the regular evacuation plan approval, thereby all other activities relating to the establishment of the solar project were delayed. Kodangal Solar Park had applied for the evacuation plan approval, and KPTCL issued a regular evacuation plan on July 28, 2017, after more than 14 months.

On the other hand, KPTCL denied the allegations adding that the regular evacuation plan approval was issued within a reasonable time, and the petitioner itself was responsible for the delay.

The Commission observed that there was no merit in the contention of the petitioner (Kodangal Solar Parks) that KPTCL was responsible for the delay of more than 14 months in granting regular evacuation plan approval.

The Commission noted that the acquisition of land was not delayed due to the reasons stated by Kodangal Solar Parks, and the facts point that the petitioner is to be blamed for the delay in acquiring the required extent of land for the project.

The Commission further noted that the petitioner had not given any acceptable evidence to infer that the liquidated damages agreed in the PPA are in the form of a penalty.

The petitioner had to commission the project within 12 months from the effective date. Under the PPA, if there is a delay in commissioning of the project and there is a change in the applicable tariff, the tariff for the project will be the lower of the tariff agreed in the PPA or the KERC’s applicable tariff as on the commercial operation date (COD).

BESCOM contended that the grounds raised by the petitioner for the non-fulfillment of the obligations under the PPA due to the alleged events of the force majeure are untenable. The alleged force majeure events like the delay in GST implementation, delay due to the demonetization by the government of India, and delay due to the wrong classification of modules at the Chennai port are not covered under the PPA and are not applicable.

KREDL said that the Letter of Allotment was made taluk-wise and not sub-station wise, which led to an ambiguity in processing the applications. The petitioner had approached KREDL seeking an evacuation plan approval. In the reply, it was stated that the solar park could evacuate power through the Mukarthihal sub-station at 110 kV level situated in the Basavana Bagewadi taluk and requested the petitioner to furnish the additional documents.

So, KREDL argued that there was no delay on its part in granting evacuation approval, and it had acted diligently according to the petitioner’s application for evacuation plan approval within a reasonable time.

The Commission said that the generic tariff would apply for the project where the tariff is ₹4.36 (~$0.059)/kWh. So, the solar power project of the petitioner is liable for a reduced tariff of ₹4.36 (~$0.059)/kWh. The Commission stated that the petitioner is not entitled to any of the reliefs it had requested.

The Commission also ordered the petitioner to pay for the delayed commissioning. The damage would be a mutually agreed pre-estimated loss that’s likely to be incurred by the respondent.

Kodangal Solar Park is an SPV of Marikal Solar Parks, a subsidiary of First Solar Power India. In January 2019, Adani Green Energy (AGEL) acquired a 51% stake in Kodangal Solar Parks. In February 2020, Total, the French oil and gas major, entered into an agreement with Adani Green to acquire a 50% stake in a joint venture company for $510 million (~₹36.26 billion). The agreement will lead to the transfer of 2,148 MW (AC) of operating solar assets, which are currently owned by AGEL to the new joint venture company. AGEL will own the remaining 50% stake in the company.

Recently, KERC dismissed Adani Green Energy Limited’s request to approve the date on which the supplemental power purchase agreement was signed to be the effective date of the PPA for a 20 MW solar project.

Earlier, KERC had dismissed a petition by Shorapur Solar Power Limited that argued its 10 MW solar project was delayed due to force majeure events. Due to the delay, the Commission had ordered that the petitioner was entitled to a tariff of ₹4.36 (~$0.061)/kWh in place of the originally agreed tariff of ₹5.13 (~$0.071)/kWh.