Petition for Solar Project Delay Can be Filed Only After Commissioning, Says KERC

The Karnataka Electricity Regulatory Commission (KERC) set aside the petition filed by Tepsol Photovoltaic Power Ventures Private Limited, requesting it to declare the disruption caused by COVID-19 pandemic as a ‘force majeure’ event.

The Commission called the petition as premature and asked the developer to approach the Commission only after the solar project is commissioned.

Earlier, Tepsol Power had filed a petition with the KERC requesting the Commission to declare the disruption caused by the ensuing COVID-19 pandemic and the subsequent lockdown as ‘force majeure’ events. It had also requested the Commission to declare the timelines of the project to be amended accordingly for the power purchase agreement (PPA).

Background


Tepsol Power, in its submission, had said that the Bangalore Energy Supply Company Limited (BESCOM) had requested the developer to file a petition before the Commission for appropriate relief.

‘TEP Solar India Mauritius’was declared the successful bidder for establishing 80 MW solar power projects across four taluks in different districts of Karnataka.

The Karnataka Renewable Energy Development Limited (KREDL) issued four Letters of Award (LoAs) dated December 10, 2018, for 20 MW of solar projects in each of the taluks.

TEP Solar India Mauritius incorporated Tepsol Power as the special purpose vehicle (SPV) for developing the projects.

The developer entered into four PPAs for the development of the projects. In its submission, Tepsol Power had asked for an extension of time for commissioning three solar projects in Gajendragad, Mundargi, and Gurmatkal taluks. As per the PPA, the projects should have been commissioned within 18 months of the “effective date.” The ‘Effective Date’ is the date ofsecuring concurrence from KERC on the PPA, which in this was December 28, 2019. So, the projects were to be commissioned on or before September 24, 2020. But the projects are not yet commissioned, and the developer is asking for the whole period of COVID-19 pandemic to be declared as a ‘force majeure’ event. By declaring this as a force majeure event, the developer expects an extension of the deadline for the commissioning of the projects.

So, the Commission observed that the petition, in essence, was for the extension of the deadline for commissioning of the projects. In such a case, KERC needs to find out the actual reason for the delay in commissioning the projects,whether the delay was due to any BESCOM event of default, a force majeure event affecting BESCOM or the developer. For that, the developer has to first commission the project and then file a petition to the Commission seeking approval for delayed commissioning based on the reasons.

The Commission also pointed out that if the developer is prevented from achieving progress in the project development and the project is subsequently delayed due to BESCOM event of default, a force majeure event affecting BESCOM or the developer even after four months, then either of the parties could terminate the agreement as per Article 16 of the PPA. The subject of force majeure is mentioned in Article 14. The Commission, therefore, concluded that the developer has to file the petition only after commissioning the project.

The Commission said that the petition filed by Tepsol Solar is rejected as it is premature to consider the request. However, the developer can approach this Commission after the commissioning project for approval of the delay, if required.

Recently, KERC dismissed Adani Green Energy (UP) Limited’s plea for relief under the force majeure clause in its PPA with the Gulbarga Electricity Supply Company Limited. The Commission also reduced the tariff to ₹4.36 (~$0.05)/kWh and asked the petitioner to pay the damages to GESCOM.

A few days ago, it passed an order in favor of the Bangalore Electricity Supply Company Limited and asked Applied Solar Technologies Private Limited to revise its rooftop solar tariff to ₹5.20 (~$0.07)/kWh from the ₹9.56 (~$0.13)/kWh tariff it claimed. The Commission also noted that the developer was not entitled to any relief sought in the petition.