Commissioning Date Extended for a 76 MW Wind Project in Maharashtra Over Force Majeure
The Commission also directed MSEDCL to return the performance bank guarantee of the developer
July 17, 2020
The Maharashtra Electricity Regulatory Commission (MERC) has extended the scheduled commercial operation date (SCOD) of a 76 MW wind project in Kavldhara, Osmanabad.
The project, developed by Renew Vayu Urja Private Limited’s, has received an extension from July 31, 2019, to January 04, 2020.
Also, the Commission asked the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to return the bank guarantee without deducting any amount on account of damages due to the commissioning of the project beyond the scheduled date.
Earlier, Renew Vayu Urja had filed a case requesting the Commission to direct MSEDCL not to encash the performance bank guarantee (PBG) and allow the extension of the scheduled commercial operation date on account of force majeure (unforeseeable) events.
Back in 2017, MSEDCL had issued the tender for the procurement of power on a long-term basis from 500 MW of wind power projects.
Later, MSEDCL announced that KCT Renewable Energy Private Limited (Renew Vayu’s former name) was the successful bidder for a capacity of 75 MW in the e-reverse auction conducted by MSEDCL. Both parties had agreed upon a relaxation of +/- 5% on the capacity considering the available configuration of wind turbine generators, and eventually, 76 MW capacity was accepted as per the PPA.
In June 2018, MSEDCL issued the letter of award (LoA) to the developer for the project at the rate of ₹2.85 (~$0.037)/kWh for 25 years.
Later, ReNew Vayu, a special project vehicle of Siemens Gamesa, requested MSEDCL to allow it to use the power evacuation for the project in the developer’s name to which the contract was awarded.
It would be a very lengthy process (6-7 months) for RVUPL under the set procedures to get the evacuation in its new name, it said. Further, Renew Vayu said that according to the guidelines in place, the registration of the project could only be done after a developer already registered with MEDA would submit the application for grid connectivity, start project development related activities like land acquisition, secure all approvals for construction of evacuation infrastructure, and construction of roads. Considering the time required for these, it requested MSEDCL to waive off the requirement of the evacuation arrangement being in the successful bidder’s name.
The wind developer had also sought an extension in financial closure on account of a delay in the signing of the PPA. MSEDCL had accepted the extension request to July 23, 2019, adding that there would be no impact on the SCOD of the project.
Then in September 2019, RVUPL submitted a letter for an extension of scheduled operation date up to December 31, 2019, due to non-receipt of the project registration by Maharashtra Energy Development Agency (MEDA). It cited this delay as force majeure, saying that it was beyond the control of the developer.
RVUPL, in its submission, had stated that it was unable to achieve the SCOD by July 31, 2019, due to the following factors:
- Delay in grid connectivity
- Delay in project registration by MEDA
- Delay in providing start-up power MSEDCL
Under the PPA, the financial closure was to be achieved within seven months and SCOD in about 12 months from the date of the PPA. So, understandably, once the financial closure date is extended, the SCOD also needs to be extended by the same period.
The date of financial closure was already extended from February 17, 2019, to July 23, 2019, (157 days). If the date of the scheduled operation, which was July 31, 2019, were not extended by the same period, then the bidder would not get any time for the construction of the project, the Commission noted.
The Commission also noted that the generator had been regularly communicating with MSEDCL to provide clarity on the issue of grid connectivity.
The Commission noted that one of the primary reasons for the delayed commissioning was the issue of allowing grid connectivity in the name of the developer. The Commission added that this issue was not limited to RVUPL but had equally affected all successful bidders under the tender.
Accordingly, the Commission allowed the extension of the scheduled commercial operation date from July 31, 2019, to January 04, 2020, on account of the force majeure.
The Commission noted that RVUPL’s 76 MW wind project had been commissioned on December 26, 2019, which was before the extended SCOD. So, it should not be subjected to any penalty on account of delay in the commissioning of the project.
Regarding MSEDCL’s stance to compensate it for any penalty for the shortfall in the renewable purchase obligation (RPO), the Commission said that such a situation was never part of the RfS or PPA document. Therefore, MSEDCL cannot impose such conditions at such a delayed stage.
In a similar judgment earlier this year, MERC asked MSEDCL to extend the financial closure and scheduled commissioning dates of a wind project. The project was developed by Clean Wind Power (Bhavnagar) Private Limited, the special purpose vehicle of independent power producer Hero Futures Energies.
Earlier, MERC had directed MSEDCL to clear its outstanding dues with three wind developers in the state, including interest for late payment charges. The developers had filed petitions with the Commission after a dispute with MSEDCL for the recovery of their dues.