Delay in Setting up Transmission System for Solar Projects will Now Attract a Penalty

Solar park development agency will attract a penalty of ₹ 1,000/day in case of such delays


According to the latest notification issued by the Ministry of New and Renewable Energy (MNRE), any delay in the scheduled commissioning date of solar projects due to unavailability of internal execution or transmission system by solar park developers will now be liable to a penalty.

According to the memorandum, if the delay in the scheduled commissioning of solar projects is caused due to unready internal evacuation or transmission systems and is caused by solar park development agency (SPDA) or solar park implementing agency (SPIA), then the SPDA or SPIA will attract a penalty of ₹ 1,000 (~$13.64) per day.

This amount can be recovered in two ways-

  • The government may recover the amount from solar park development agency from the central financial assistance (CFA) given to them
  • In case CFA is not available, then National Thermal Power Corporation Limited (NTPC) will recover the amount from solar park developer, who will later collect it from the development or implementing agency.

In such cases, NTPC may issue orders for extension of time, and then only act on recovery of penalty.

Of late, the domestic solar sector has witnessed many cases of delays in project commissioning due to a plethora of reasons like difficulty in land procurement, lack of transmission infrastructure to name a few. However, while some developers have had to bear the brunt for the delay, others have scored a win.

Project commissioning delays in India are handled strictly by government agencies often resulting in the encashment of performance bank guarantees. Recently, the Telangana State Electricity Regulatory Commission (TSERC), however, provided relief to the developers of four grid-connected solar projects in the state, totaling 55 MW. In all the four cases, TSERC accepted the reasons given by the project developers for the delay in the scheduled commissioning dates, scoring a win for developers.

However, in another similar case, the Karnataka Electricity Regulatory Commission (KERC) dismissed a petition filed by Emmvee Photovoltaic Power Private Limited, stating that the solar power developer is not entitled to the relief due to project commissioning delay of one day.

Recently, MNRE proposed to reduce the commissioning timelines of solar projects in an effort to facilitate the timely achievement of the country’s target of 100 GW of solar capacity by 2022. According to the document reviewed by Mercom, solar PV projects inside a solar park have a proposed commissioning timeline of 15 months from the date of power purchase agreement (PPA). Nine months will be provided for financial closure and six months for construction of the project.

Earlier, Mercom published a report analyzing how lack of transmission availability may cause trouble for India’s mega solar tenders.