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

The Karnataka Electricity Regulatory Commission (KERC) recently 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.

The Commission accepted the petitioners’ contention that the delay due to incessant rainfall in the north Karnataka region from July 2019 to October 2019 constituted a ‘force majeure’ event.

Izra Solar Energy and Abha Sunlight, two special purpose vehicles (SPVs) of ReNew Power, filed petitions seeking condonation of the delay of five days and eight days respectively in commissioning two solar projects of 20 MW each due to incessant rainfall and flooding.

The projects were to be developed in the Golak taluk of Belgaum district by Izra Solar Energy and the Kalaghatagi taluk of Dharwad district by Abha Sunlight.


Background

The Karnataka Renewable Energy Development Limited (KREDL) had invited proposals to develop solar projects in Karnataka in 2017. The projects were to be implemented in 43 taluks of Karnataka. ReNew Power Solar emerged as the successful bidder in eight taluks to establish 20 MW solar projects in each taluk.

The petitioners entered into a power purchase agreement (PPA) on March 24, 2018, at a tariff of ₹3.24/kWh. The scheduled commercial operation date was 18 months from the effective date.

Unless affected by ‘force majeure’ events, the petitioners were required to commence power supply by November 3, 2019.

The developers contended that there was incessant rainfall in the northern region of Karnataka during the monsoon season in 2019. Many areas, including the project sites, in the Belgaum and Dharwad districts, were flooded.

The developers faced difficulty in completing the work at the project sites. They sought an extension of 60 days, i.e., from November 3, 2019, until January 2, 2020, due to a ‘force majeure’ event that was entirely beyond their control.

The project in the Golak taluk of Belgaum district was commissioned on November 8, 2019 (a delay of five days). The project in the Kalaghatagi taluk of Dharwad district was commissioned on November 11, 2019 (a delay of eight days).

The Chamundeshwari Electricity Supply Company Limited (CESCL), in its response, said the petitioners had signed the PPAs with full knowledge that the project sites were prone to incessant rainfall and floods. The petitioners had taken such risks with complete knowledge of the weather conditions.

The state DISCOM further added that the developers had argued that the delay was due to flooding at the project sites. However, they had not produced any proof showcasing the refusal of laborers or transporters of construction materials from delivering the construction materials.

Commission’s analysis

The Commission observed that the project developers had clearly stated that the excessive rains continued for three months and resulted in flooding of the entire north Karnataka region, including access roads and bridges leading to the project sites.

It said that the petitioners could not have reasonably foreseen or avoided the excessive rainfall for three months and the resulting floods, which constituted a ‘force majeure’ event.

The state regulator noted that the photographs of the sites and other materials submitted by the petitioners established heavy rainfall and flooding at the project sites. The petitioners were prevented from carrying out the construction work from July to October 2019.

The Commission, therefore, approved the delay of five and eight days in the commissioning of the projects.

In June this year, KERC ruled that ACME Kudligi Solar was liable for a reduced tariff of 80% of the quoted tariff and liquidated damages for a delayed 20 MW solar project in Karnataka due to the delay in commissioning. The company had cited ‘force majeure’ events as the reason for the delay.

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