Solar Projects Totaling 90 MW Citing 'Force Majeure' Get Extension for Commissioning

The Delhi Electricity Regulatory Commission (DERC) has extended the commissioning date of three solar power projects of 90 MW cumulative capacity and ruled that no compensation would be payable to the Tata Power Delhi Distribution Limited (TPDDL) for the period of delay from March 25, 2020, to the delivery date of October 27, 2020.

Sun Edison group companies – SEI Renewable Energy (SEI Renewable), SEI Jyoti Swaroop Power (SEI Jyotiswaroop), and SEI Ravikiran Energy (SEI Ravikiran) – had filed a petition seeking an extension of the commissioning date of the respective 30 MW solar power projects (cumulative capacity of 90 MW) at Shivpuri district in Madhya Pradesh due to ‘force majeure’ because of the outbreak of the COVID-19 pandemic and the subsequent lockdown. The petitioners had sought an extension of the commissioning date to October 31, 2020.

Background

TPDDL and Sun Edison signed a power purchase agreement (PPA) for 180 MW of solar projects on July 15, 2015. Greenko eventually took over Sun Edison on account of the financial difficulties faced by the latter.


The developers and TPDDL executed a supplementary PPA on January 17, 2020, and the commissioning date of April 20, 2020, was agreed upon.

As per the Ministry of New and Renewable Energy’s (MNRE) orders dated April 17, 2020, and June 30, 2020, relevant implementing agencies were directed to allow an extension of time in scheduled commissioning due to the Covid-19 pandemic’s impact.

The MNRE clarified that the lockdown period was to be treated from March 25, 2020, to May 31, 2020. In its order on February 19, 2020, the Ministry of Finance recognized the disruption in supply chains as a ‘force majeure’ event.

The developers said that majority of the work had already been completed. On account of the pendency of approval of the supplementary PPA and the revised commissioning date due to the pandemic, they could not get funds for its lender (Tata Capital).

Later, the developers had written to TPDDL and said that they were ready to commission the project on October 15, 2020, per the PPA, dated July 15, 2015.

TPDDL, in its submission, said that although the projects were affected by the pandemic outbreak, construction activities were not impacted until the announcement of the countrywide lockdown on March 25, 2020. The developers had failed to demonstrate the progress of the projects until March 25, 2020.

Commission’s Analysis

The Commission said that TPDDL had submitted that they had received communication from SEI Solarvana requesting an extension of the date of commissioning 90 MW solar projects by four months from the scheduled commercial operation date of November 21, 2019.

The regulator stated that all renewable projects under implementation as of the lockdown date were given a time extension of five months from March 25, 2020, to August 24, 2020. This blanket extension was to be given without the need for a case-to-case examination.

The regulator noted that it was clear that the pandemic and its related restrictions qualified as a ‘force majeure’ event. It added that the petitioner could not be blamed for non-action at any stage.

“It is observed that the PPA provides for the extension of the period of scheduled delivery date or the revised scheduled delivery date, as the case may be, by a period for which the seller has been affected by ‘force majeure’ event. Therefore, because of the facts in the PPA related to ‘force majeure,’ facts placed on record, and considering the grim situation of COVID-19 global pandemic, the request for the extension of commissioning is granted up to October 27, 2020,” the Commission noted.

It also said that TPDDL would not be eligible for any indemnification payments for the delay period until the date of delivery.

Recently, MNRE issued a notification denying requests for another five-month extension for commissioning renewable energy projects, stating that these extensions would not be granted in a routine manner going forward.  The MNRE said it had received requests for another five-month extension for renewable projects commissioning on top of its previous five-month extension between March 25, 2020, and August 24, 2020, amid the COVID-19 induced lockdown.

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