Three Solar Projects Citing ‘Force Majeure’ Get Commissioning Deadline Extension

The Karnataka Electricity Regulatory Commission (KERC) recently granted commissioning deadline extension to three solar projects on the ground of ‘force majeure’ events. It also approved the tariffs for the three projects as agreed in the power purchase agreements (PPAs).

The Commission clarified that the petitioners were not liable to pay any liquidated damages because of the time extension.

Mayfair Renewable Energy, Aavanti Renewable Energy, and Brics Renewable Energy had filed petitions seeking extension in the commercial operation dates on the grounds of ‘force majeure.’ The developers had also requested the Commission to restrain the distribution companies (DISCOMs) from imposing liquidated damages or invoking the bank guarantee.

Background


Mayfair Renewable Energy and Aavanti Renewable Energy have solar projects of 20 MW each in the Gadag and Chitradurga districts of Karnataka. Brics Renewable Energy has a 2 MW project in the Davangere district of Karnataka.

All the three developers are special purpose vehicles (SPVs) of the consortium comprising OPG Power Generation as the lead member and IBC Solar Ventures India B.V.

The developers signed the PPAs with the DISCOMs on June 3, 2016.

The petitioners argued that the goods and services tax (GST) rendered the solar projects sluggish. They submitted that the delay caused by the DISCOMs in signing the supplementary PPAs had resulted in a substantial adverse financial impact on them and affected the timely commissioning of the projects. Commissioning was delayed because there was a delay in granting evacuation approval.

The Karnataka Renewable Energy Development Limited, in its submission, argued that the developers were not entitled to any relief, as they were aware of the stipulated time. Since they had agreed, there could not be any further extension of time.

Commission’s analysis

The state regulator noted that the developers had put forward four major contentions, i.e., delay in signing supplementary PPAs, issuing evacuation approval, the introduction of GST, and delay in granting land for bay allocation.

The Commission agreed to Mayfair Renewable Energy and Aavanti Renewable Energy’s claims that the delay was due to the time taken in the grant of land for bay allocation by the Karnataka Power Transmission Corporation Limited (KPTCL), which could be considered a ‘force majeure’ event.

The Commission, therefore, granted an extension of 207 days from October 6, 2017, to April 30, 2018, to Mayfair Renewable Energy and said that the petitioner was entitled to the tariff of ₹5 (~$0.067)/kWh as agreed in the PPA.

The state regulator also granted an extension of 119 days to Aavanti Renewable Energy from October 14, 2017, to February 12, 2018. It also approved the ₹4.97 (~$0.066)/kWh tariff.

In the case of Brics Renewable Energy, the state regulator noted there was a delay in processing the evacuation approval by KPTCL. Hence, the Commission granted an extension of 114 days from October 7, 2017, to January 29, 2018. It also approved the tariff of ₹5.07 (~$0.068)/kWh.

The Commission, however, observed that the petitioners had failed to furnish any documentary evidence regarding the impact of GST on the projects.

In November this year, KERC condoned the delay in commissioning two solar projects of 20 MW each. It extended the scheduled commercial operation dates for both the projects on account of a ‘force majeure’ event.

Earlier, KERC had approved a tariff of ₹8.40 (~$0.115)/kWh per the PPA signed between Bangalore Electricity Supply Company (BESCOM) and the project developer Cambria Solar. The Commission had also approved the extension of six months granted by BESCOM for the solar project’s commissioning date.

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