Days After Invoking Force Majeure, Punjab Allows Solar Developer to Supply Power

Earlier, the PSPCL notified Prayatna Developers that it is unable to procure power due to force majeure event


In the latest development, the Punjab State Power Corporation Limited (PSPCL) has allowed Prayatna Developers Pvt. Ltd, to inject solar power into the grid with immediate effect.

The PSPCL had issued a force majeure notice several days ago, stating that it has been forced to curtail power purchase and generation due to the ongoing nationwide lockdown. A ‘force majeure’ is declared in the event of unforeseeable circumstances that prevent parties from fulfilling a contract.

This letter comes after Solar Energy Corporation of India Ltd (SECI) wrote to 24 distribution companies and agencies, underlining the government’s notification on ‘must-run’ status and payment realization, and invoicing of renewable power projects. SECI said that any notice regarding the Article-7 (which refers to force majeure) of signed power sale agreement (PSA) would be treated as null and void due to the directions issued by the central government.

In an email notice, the Punjab distribution company had informed Prayatna Developers Private Limited, a solar power special purpose vehicle of Adani Power Limited, that due to a load crash, it was unable to procure power because it was a force majeure event (COVID-19 outbreak). The PSPCL had also warned that any power injected into its system would be at the cost and risk of the developer.

The corporation instructed the renewable generators to disconnect their generating facilities immediately from the Punjab State Power Corporation Limited and Power State Transmission Corporation Limited systems until the COVID-19 epidemic lasts. The state was citing the force majeure clause under their power purchase agreements (PPAs) signed between the renewable generators and PSPCL, as previously reported by Mercom.

The list of generators that were asked to stop the generation included solar and wind generators including Abundant Energy, ACME Solar, Allianz Ecopower, Azure Renewable Energy Private Limited, Ecoenergy Inc., PEDA Phulokheri, Solaire Power Private Limited, Vector Green Surya Urja Private Limited, subsidiary of Adani Power and NTPC Vidyut Vyapar Nigam Limited (NVVN), Solar Energy Corporation of India (SECI) among others. Generators of biomass and cogen power, biogas, and mini hydel projects were also asked to stop generating power.

Other states like Uttar Pradesh, Madhya Pradesh, and Andhra Pradesh have also invoked the force majeure clause during the ongoing pandemic.

To address this issue, the Ministry of New and Renewable Energy (MNRE) has reiterated that the “must-run” status of renewable energy projects remains unchanged during the COVID-19 lockdown period and curtailment or renewables other than for grid safety reasons would amount to deemed generation.

Deemed generation means the energy which a generating station was capable of generating but could not generate due to various reasons (curtailment in this case). So, if the DISCOMs curtail power for reasons other than grid security, they will still have to pay for the scheduled capacity of that renewable energy project under the deemed generation clause.

Some distribution companies are still resorting to the curtailment of renewable energy without any valid reasons, the MNRE noted in its order.

Like Punjab, the Andhra Pradesh Southern Power Distribution Company Limited (APSPDCL) has also sought refuge under the force majeure clause due to the pandemic outbreak and the subsequent nationwide lockdown.

Following the lockdown order, all the distribution companies operating in the state of Uttar Pradesh are faced with an imposing challenge of a substantial reduction in collections. According to a notice released by the Uttar Pradesh Power Corporation Limited (UPPCL), the massive disruption in economic activity due to the lockdown is likely to affect a significant proportion of consumers’ capacity to pay electricity bills on time.

Meanwhile, the Madhya Pradesh Power Management Company Limited (MPPMCL) states that it is constrained to invoke the provisions of the force majeure clause under the power purchase agreement, and the current events on nationwide lockdown may be termed as the force majeure events affecting the obligations of MPPMCL under the PPA. Further, due to the fall in the collection of revenues, even the payment of the power purchase bills of the scheduled capacity may also be delayed.

The Coronavirus outbreak across the globe including India, has taken a toll on the economy and life, in general. In order to curb the spread of the pandemic, the Government of India has called for a 21-day countrywide lockdown which started on March 25, 2020. Business and industrial sectors including the power industry, have been severely hit by the ongoing pandemic. You can track the latest updates related to the impact of COVID-19 on renewable and power industries here.