Tamil Nadu Regulator Refuses to Extend Commissioning Deadline for a 50 MW Solar Project

The Tamil Nadu Electricity Regulatory Commission (TNERC) rejected a solar developer’s petition to extend the project’s commissioning date. The TNERC approved the commissioning of only 50 MW out of the total capacity of 100 MW. For the remaining 50 MW, the Commission said that the parties could renegotiate the applicable tariff and enter into a new power purchase agreement (PPA).

Solitaire BTN Solar Private Limited had filed a petition requesting the Commission to direct the respondents to construct the required infrastructure for evacuating 100 MW. It had requested the Commission to declare that the delay in commissioning the project was not the petitioner’s fault. The date should be modified and extended as per the commissioning of the 230/110kW substation at Ganguvarpatty village. It had also requested the Commission to declare that BTN Solar was not liable to pay the amount of ₹200 million (~$2.7 million) as liquidated damages for the delay in the Commission of the project.


To meet the renewable purchase obligation (RPO) targets for the financial years (FY) 2019-20 and 2020-21, the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) had invited bids for the procurement of 1.5 GW solar power.

On June 15, 2017, BTN Solar submitted its bid to build and establish solar power projects and sell the generated electricity to TANGEDCO from the three locations in Virudhunagar district of Tamil Nadu.

On July 06, 2017, BTN Solar participated in a meeting held at TANGEDCO where it accepted the negotiated tariff of ₹3.47 (~$0.05)/kWh. On September 28, 2017, the petitioner entered into a PPA with TANGEDCO for the supply of 100 MW of power.

As per the PPA, the petitioner was under obligation to commission the project’s total capacity on or before 24 months from the date of signing the PPA dated September 28, 2017, which was September 25, 2019.

BTN Solar, in its submission, said that it had sent multiple reminders to TANGEDCO for expeditious completion of pre-connectivity works.

TANGEDCO said that the developer had furnished a performance bank guarantee (PBG) of ₹200 million (~$2.7 million) regarding the proposed 100 MW project. As per the terms and conditions of tender, the entire PBG amount of ₹200 million (~$2.7 million) furnished by the petitioner would be forfeited if the project was not commissioned on or before February 27, 2020.

BTN Solar, in its submission, said that REC Limited approved the project loan for the entire project as early as July 09, 2018. Therefore, it said that the contention raised by the TANGEDCO that the actual reason for the delay in commissioning the project might be due to delay in achieving financial closure was baseless.

The developer further noted that the delay in achieving the 50 MW capacity’s commercial operation by February 20, 2020, and after that delay for the balance capacity of 50 MW, had been on account of unavailability of transmission evacuation system and the outbreak of COVID -19 pandemic.

The petitioner had invoked the ‘force majeure’ clause under the PPA, indicating various difficulties faced by it while implementing the project due to the pandemic outbreak.

Commission’s Analysis

On extending the scheduled dates for commissioning of the project, the Commission noted that it had no power to extend such time limit.

The state regulator said that the time frame for the project’s commissioning as per PPA was 24 months from the date of execution of the PPA. In the present case, the PPA was executed on September 28, 2017, and the commissioning of the project should have been completed before September 25, 2019. The Commission further added that the PPA also provided that if the project is further delayed by five months, the petitioner should, in addition to the bank guarantee, pay liquidated damages of ₹10,000 ($135)/MW per day to the extent of the capacity not commissioned.

“It is seen that the petitioner has also sought to treat the pandemic as a ‘force majeure’ event for supporting its stand for extension of the control period. Any relief can be extended only when such pandemic occurred within the period of PPA. Here the pandemic period is before the commissioning date, and so there is no reason to accept the contentions in this regard. Accordingly, the issue is decided in favor of the respondent,” added the Commission.

The state regulator noted that TANGEDCO was entitled to encashment of PBG to the extent of 60% only until the date of declaration of availability of 100% evacuation capacity. After that, TANGEDCO was entitled to encash 100% from such date of declaration.

Further, it added that the distribution licensee could accept only a minimum of 50% of the project capacity towards part commissioning. The 16 MW of the balance 50 MW reported as commissioned on July 10, 2020, does not qualify for part commissioning. The Commission noted that the other 9 MW capacity stood terminated as it was commissioned on August 14, 2020, after the cut-off date of July 24, 2020, stipulated in the PPA.

Considering all the facts, the Commission said that the petitioner had not even attained the financial closure for commissioning the project’s remaining 25 MW. Therefore, it is clear that the petitioner was not ready for commissioning of the said 25 MW capacity of the project within the period of PPA.

Recently, in a similar case, the Uttar Pradesh Electricity Regulatory Commission allowed an extension of the scheduled commissioning date of a 50 MW solar project in Chitrakoot district. The deadline was extended by seven months and two weeks.

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