The Indian solar market has grown from a 3 GW installed capacity in 2014 to 35 GW in 2019. With the rapid expansion of solar and wind sectors, the disputes involving the stakeholders have also increased.

In June 2019, the Ministry of New and Renewable Energy had issued an order to establish a system to resolve disputes between solar and wind energy developers and the Solar Energy Corporation of India (SECI) or the National Thermal Power Corporation (NTPC) which are the government’s implementing agencies. The MNRE has now issued procedural guidelines for the dispute resolution mechanism (DRM) which will be applicable to projects being implemented through SECl or NTPC.

According to the guidelines, SECI and NTPC will provide a secretariat for the dispute resolution committee (DRC), with its head being designated as the secretary from SECI or NTPC.

SECl and NTPC are expected to provide designated personnel, not below the rank of general manager, who will function as the secretary of the DRC. All the applications under the DRM, whether for appeal against the decisions given by SECI or NTPC based on the terms of contract or the requests not covering under the terms of contract, will be addressed to the secretary of the DRC.

All applications of dispute would be addressed to the DRC secretary at SECl or NTPC with copies sent to MNRE’s division dealing with the DRM. In an amendment to the guidelines, the ministry has mandated that developers should reach out to SECI or NTPC first before submitting the application to the committee. In case the developers directly approach the committee, their application will get rejected.

The DRC is expected to hold hearings on the applications and submit its recommendations to the MNRE within 21 days. It will also be expected to meet weekly to discuss the pending cases. In case the DRC is unable to give its decision within the time frame of 21 days, the secretary must inform the MNRE which may then provide an additional 14 days for the DRC to make a decision.

The MNRE also issued an amendment allowing a developer to appeal to the DRC against the SECl or NTPC’s order within 21 days. Moreover, any negative financial implication on the developer due to SECI or NTPC’s order should be put in abeyance for 21 days after the order.

All expenses of the DRM or relating to these guidelines, including the expenses related to the DRC and the secretariat, will be paid by SECl or NTPC. Besides these, the MNRE has also issued amendments to the guidelines regarding force majeure, extension of time, and fees related to this mechanism.

Setting up a mechanism for disputes between developers and intermediary power procurers such as SECI or NTPC is expected to boost confidence among investors in the renewable energy sector in India.

Recently, the MNRE, through a letter, has directed NTPC and SECI to release performance bank guarantee for the solar and wind power projects that have been commissioned.  According to the letter PBGs may be released within 45 days from COD (Commercial Operation Date), subject to fulfillment of requirements of submission of all the requisite documents. Further, MNRE also mentioned that in case any developer finds delays in release of PBGs, it should be brought to the notice of the MNRE and the managing director of the concerned intermediary procurer.