The Punjab State Transmission Corporation Limited (PSTCL) has announced the curtailment of power under force majeure clause (outbreak of COVID-19) from the projects generating renewable energy until the pandemic lasts.

A ‘force majeure’ is declared in the event of unforeseeable circumstances that prevent parties from fulfilling a contract.

The corporation has instructed the renewable generators to discontinue their generating facilities immediately from the Punjab State Power Corporation Limited (PSPCL) and PSTCL systems until the COVID-19 epidemic lasts. The state agencies are citing the force majeure clause under their power purchase agreements (PPAs) signed between the renewable generators and PSPCL.

The list of generators includes solar and wind generators including Abundant Energy, ACME Solar, Allianz Ecopower, Azure Renewable Energy Private Limited, Ecoenergy Inc., PEDA Phulokheri, Solaire Power Private Limited, Vector Green Surya Urja Private Limited, subsidiary of Adani Power and NTPC Vidyut Vyapar Nigam Limited (NVVN), Solar Energy Corporation of India (SECI) among others. Generators of biomass and cogen power, biogas and mini hydel projects are also asked to stop generating power.

Last week, the Punjab State Power Corporation Limited (PSPCL) issued a ‘force majeure’ notice stating that it has been forced to curtail power purchase and generation due to the ongoing nationwide lockdown. In an email notice, the state distribution company informed Prayatna Developers Private Limited, a solar power special purpose vehicle of Adani Power Limited, that due to a load crash, it is unable to procure power because of the force majeure event (COVID-19 outbreak).

Since the outbreak of the pandemic in the country, DISCOMs across states have been invoking the force majeure clause, putting the viability of renewable power generation projects under threat.

For instance, Uttar Pradesh, Madhya Pradesh, and Andhra Pradesh have also sought refuge under the force majeure clause following the COVID-19 pandemic and the subsequent nationwide lockdown for not paying power generators.

The Ministry of Power earlier gave a directive that the central public sector undertaking (CPSU) generation and transmission companies would continue to supply electricity, even to DISCOMs, which have substantial outstanding dues to the generation companies. As per the announcement, in the current emergency, there will be no curtailment of supply to any DISCOM. The Ministry also directed the Central Electricity Regulatory Commission (CERC) to provide a moratorium of three months to DISCOMs to make payments to the generating companies and transmission licensees and not levy any penalties for late payments. The Ministry also requested the state governments to issue similar directions to state electricity regulatory commissions.

Additionally, the MNRE has granted a ‘must-run’ status to renewable energy generating stations, which will remain unchanged throughout the lockdown period. It also said that since the DISCOMs have already been given sufficient relief and the electricity from renewable generating stations comprises only a minor portion of the total electricity generation in the country, the payments to these renewable generators should be made regularly.

A few days ago, the Ministry of Power (MoP) had issued a directive which states that the power may be scheduled even if the payment security mechanism (PSM) is reduced by 50% against the initial contract. The order will be valid until June 30, 2020. In this context, the ministry issued a circular regarding the opening and maintaining of adequate Letter of Credit (LC) as payment security mechanism under the power purchase agreements (PPAs) by the distribution licensees.

The Coronavirus pandemic is proving to be the biggest challenge for the solar industry this year, and its repercussions are being felt all across the globe. The government is taking all the necessary steps to minimize its effects. Track the latest developments and the steps taken by the government here.