Solar Developer's Plea for Commissioning Deadline Extension Rejected

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The Uttar Pradesh Electricity Regulatory Commission (UPERC) recently rejected a solar developer’s plea seeking an extension of the commissioning deadline on the grounds of ‘force majeure’ events and said that the developer was liable to pay liquidated damages for the delay in commissioning the project.

Maheshwari Mining and Energy had filed a petition seeking an extension of the scheduled commercial operation date without imposing any liquidated damages on ‘force majeure’ grounds.

Background

The Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA) invited bids to procure power from 500 MW of solar projects in July 2018.


Maheshwari Mining and Energy was the successful bidder for a capacity of 40 MW; 20 MW at a tariff of ₹3.17 (~$0.039)/kWh, and another 20 MW at a tariff of ₹3.19 (~$0.040)/kWh. The power purchase agreements (PPAs) for the two projects were executed on December 21, 2018.

The petitioner said that by February 2020, several restrictions were imposed worldwide because of the Covid-19 pandemic, which affected the solar supply chain.

The Ministry of New and Renewable Energy (MNRE) recognized Covid-19 as a ‘force majeure’ event. Accordingly, an extension of five months was granted for all renewable projects to achieve the scheduled commercial operation date across the country.

Maheshwari Mining and Energy requested an extension of six months on account of the lockdown imposed in the country because of the Covid-19 pandemic and other force majeure events like land acquisition, connectivity approval, and construction of bays.

Later, the petitioner requested Uttar Pradesh Power Corporation (UPPCL) for another six-month extension to commission the project without imposing any liquidated damages.

In its submission, UPPCL said that the petitioner was seeking relief in anticipation of the third wave of Covid-19. However, ‘force majeure’ cannot be invoked for events that are anticipatory in nature. A blanket extension was given for five months during the first wave, and any further extension was at its discretion.

UPPCL clarified that after extensions, the scheduled date of commissioning date of the project was June 5, 2021, without liquidated damages.

It added that the petitioner failed to fulfill its obligation to commission the project on time.

Commission’s analysis

The Commission observed that seven other projects with a total capacity of 410 MW had been commissioned but not that of the petitioner.

It said that the Uttar Pradesh Power Transmission Corporation (UPPTCL) had been diligent in processing the requests regarding the estimate for the supervision charges. However, the petitioner contributed to the delay in constructing the transmission lines because of the delay in payment of supervision charges.

The state regulator said that when the bays were complete, the transmission line, which was to be constructed by the petitioner, was still not complete for the connectivity to the Moth substation as per the terms of the PPA.

UPERC added that neither of the projects of 20 MW each achieved commissioning by the extended deadline of December 5, 2021.

It said no capacity had been commissioned within the extended timeline of June 5, 2021, which was without liquidated damages. As per the provisions of the PPAs, UPNEDA was entitled to levy liquidated damages proportional to the period of delay and capacity commissioned after June 5, 2021, and up to December 5, 2021, for each of the 20 MW projects.

In a similar petition, the Maharashtra Electricity Regulatory Commission recently extended the commissioning date of ACME Heergarh Powertech’s 300 MW solar project in Rajasthan on the ground of ‘force majeure’ events.

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