The Gujarat Electricity Regulatory Commission (GERC) has rejected Gensol Engineering’s plea to allow its wholly owned special purpose vehicle (SPV), Gensol Green Energy, to execute the power purchase agreement (PPA) with Paschim Gujarat Vij Company (PGVCL).

The order came as part of GERC’s approval of tariffs for 125 solar power projects with a combined capacity of 276 MW under the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) -C program.

While granting tariff adoption for the projects, the Commission clarified that Gensol must adhere to the tender terms and conditions that require the original bidder to execute the PPA directly.

Background

The case stems from a tariff-based competitive bidding process conducted by PGVCL to procure solar power through the RESCO model for feeder-level solarization under Component C of the PM-KUSUM program.

PGVCL issued a Request for Selection on February 29, 2024, for 125 solar projects with a cumulative capacity of 276 MW to support around 45,800 agricultural pumps connected to 11 kV feeders.

On August 21, 2024, Gensol Engineering emerged as a successful bidder for 28 projects with an aggregate capacity of 118.5 MW.

On September 18, 2024, Gensol sought permission from PGVCL to allow its wholly owned SPV, Gensol Green Energy, to execute the PPA. PGVCL rejected this request on November 8, 2024, stating that the RfS explicitly permitted only the bidder who participated in the tender to sign the PPA.

Gensol filed an objection on December 20, 2024, urging the Commission to direct PGVCL to permit the SPV to sign the PPA. It argued that forming an SPV was an established practice in the renewable sector, not prohibited under MNRE guidelines, and essential for project financing and credit structuring.

Gensol also cited precedents from other states, such as Rajasthan, Uttar Pradesh, and Maharashtra, where SPV execution was allowed. PGVCL countered that allowing such substitutions after bid finalization would violate the transparency and sanctity of the bidding process.

Commission’s Analysis

In its final order, GERC analyzed the pending issue related to Gensol’s plea. The Commission held that the RfS clearly defined eligible bidders and did not allow post-bid substitution of the contracting entity.

It noted that Gensol chose to participate as a sole bidder rather than through a joint venture or SPV structure, despite the RfS providing such an option at the bidding stage. Therefore, Gensol’s subsequent request to assign the PPA to its SPV was inconsistent with the tender terms.

The Commission further observed that the doctrine of “business efficacy” cited by Gensol could not be invoked to modify essential contractual conditions such as the identity of the contracting party.

GERC also ruled that precedents from other states could not override PGVCL’s specific RfS framework and state-specific bidding conditions.

It approved the discovered tariffs for all 125 solar projects with a capacity of 276 MW.

However, it directed Gensol Engineering to sign the PPA in its own name.

Recently, GERC approved tariffs of ₹280,000 (~$3,160.22)/MW/month and ₹285,600 (~$3,223.42)/MW/month for Gujarat Urja Vikas Nigam’s 500 MW/1,000 MWh standalone battery energy storage system projects in Gujarat.

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