Delayed Solar Project in Karnataka Exempted from Liquidated Damages, Tariff Reduction

The Commission also approved the tariff of ₹5.05/kWh as per the provisions of the PPA


The Karnataka Electricity Regulatory Commission (KERC), in a recent order, ruled in favor of ReNew Wind Energy (MP Three) and condoned the delay in the commissioning of a 20 MW project in the Davangere district of Karnataka.

Also, the Commission declared that the solar developer was entitled to a tariff of ₹5.05 (~$0.067)/kWh as per the provisions of the power purchase agreement (PPA).

The Commission directed the Bangalore Electricity Supply Company (BESCOM) not to levy liquidated damages and, if already levied, to be refunded to the solar developer within two months.

ReNew Wind Energy (MP Three) had filed a petition seeking a declaration from the Commission that the delay in commissioning the project was due to ‘force majeure’ events. It had also sought the approval of the tariff of ₹5.05 (~$0.067)/kWh as per the provisions of the PPA.


The petition pertains to the 20 MW project in the Davangere district of Karnataka.

The Karnataka Renewable Energy Development  Limited (KREDL) invited bids to develop 1,200 MW solar projects in 60 taluks of Karnataka. The developer emerged as the successful bidder to develop a 9*20 MW capacity of solar projects in nine taluks of Karnataka.

The developer signed a PPA with BESCOM on May 23, 2016, for 25 years at a tariff of ₹5.05 (~$0.067)/kWh. The scheduled commercial operation date as per the PPA was October 14, 2017.

After a delay of 223 days, the developer received a tentative evacuation program from the Karnataka Power Transmission Corporation Limited (KPTCL) for the proposed 20 MW solar project.

The developer, in its submission, said that it had commenced the land acquisition process immediately after obtaining the evacuation approval. It had to purchase agricultural lands and initiate the process of conversion of agricultural land, and it had made the applications well within time.

Later, the developer sought an extension of the scheduled commissioning date by 30 days due to various ‘force majeure’ reasons. The reasons were demonetization, delay in the power evacuation approval, implementation of goods and services tax (GST), and the delay in obtaining permits from the state government.

The actual commissioning of the project was achieved on November 11, 2017.

BESCOM, in its submission, said that the PPA clearly stated that in the event of delayed execution of the project, the developer would only be entitled to a tariff of ₹4.36 (~$0.058)/kWh in terms of the Commission’s order dated April 12, 2017, the order applicable at the time when the petitioner commissioned its project.

The state DISCOM added that as per the PPA, in the event of delay in commissioning of the project and during such period, if there was a variation in the KERC tariff, then the applicable tariff for the project would be lower than the rate mentioned in the PPA or the varied tariff applicable as on the date of commercial operation.

Commission’s analysis

The Commission observed that though the developer had suffered a delay on the grounds of evacuation approval, demonetization, and introduction of GST laws, it had commissioned the project on November 11, 2017.

“These events fall under the ‘force majeure’ clause described in the PPA. Considering this, the developer is entitled to an extension of 28 days from October 14, 2017,” the Commission added.

The Commission also noted that the developer was entitled to a tariff of ₹5.05 (~$0.067)/kWh as per the provisions of the PPA.

Also, as the developer achieved the commissioning of the project within 30 days from the scheduled commissioning date, it would not have to pay liquidated damages.

Last month, KERC ruled in favor of a solar developer and allowed compensation for four solar projects of 20 MW each on the grounds of the imposition of the GST laws.

Earlier, KERC had ruled in favor of Adani Green Energy (UP) and directed BESCOM to compensate the solar project developer for the additional cost incurred due to the imposition of GST laws.

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