Karnataka Regulator Reduces Tariff for a 20 MW Solar Project for Commissioning Delay

The Commission also asked the developer to pay liquidated damages to the state DISCOM for the delay


The Karnataka Electricity Regulatory Commission (KERC) dismissed Adani Green Energy (UP) Limited’s (Adani Green) plea for relief on the grounds of the ‘force majeure’ clause for its 20 MW solar project.

The company had signed the power purchase agreement (PPA) with the Chamundeshwari Electricity Supply Company Limited (CESCL).

The Commission had approved the tariff of ₹4.36 (~$0.06)/kWh for the energy supplied to CESCL from the scheduled commercial operation date (SCOD) of the project. The Commission also directed Adani Green to pay the liquidated damages for the delay in the commencement of power supply.

The Petition

Earlier, Adani Green had filed a petition asking the Commission to declare that it was prevented from performing its obligations under the power purchase agreement (PPA) due to ‘force majeure’ (unforeseeable) events affecting it.

It had asked the Commission to declare that the effective date would be the date on which the supplemental power purchase agreement (SPPA) received approval from the Commission. It had also requested the Commission to direct the respondents not to levy any liquidated damages and direct the respondents to make payment at the rate of ₹4.79 ($0.064)/kWh, as per the PPA.


Back in 2016, the Karnataka Renewable Energy Development Limited (KREDL) had invited bids for the development of 1.2 GW of solar projects in various taluks through private sector participation.

KREDL later accepted Adani Green’s bid for the development of 20 MW capacity at T Narasipura taluk in Mysore district. Adani Green accepted the letter of award (LoA) for the development of the project and proposed to execute the project through special purpose vehicle, Adani Green Energy (UP) Limited.

After that, Adani Green Energy (UP) Limited executed a PPA with CESCL for the setting up of the solar power project. The Commission approved the PPA subject to incorporating certain modifications by entering into a suitable SPPA.

According to the PPA, the developer was required to achieve financial closure, obtain evacuation approval, and documentary evidence of having clear title and possession of the land, within eight months from the effective date of the PPA.  The PPA defined the scheduled commissioning date as twelve months from the effective date of the PPA.

Adani Green had, immediately after issuance of LOA, tried to get connectivity approvals from Karnataka Power Transmission Corporation Limited. However, it kept the connectivity approval hanging, as it waited for the Commission’s approval of the PPA. In the absence of the two documents, Adani Green was unable to go ahead with the land acquisition process.

Adani Green said that there was considerable delay in the approval of PPA by the Commission, and, so, the effective date should be changed from September 27, 2016, to the date of signing of supplemental PPA on November 26, 2016.

It further added that given the changes in the definition of the delivery point, it had to decide whether to continue with or shift the project site. Adani Green had to wait for a considerable amount of time for the approval of the SPPA to get the certainty on the delivery point.

CESCL, in its reply, argued that Adani Green did not produce any documents showing that it was in clear possession of the land to execute the project. The state DISCOM said that the delays in obtaining approvals could not be considered as ‘force majeure,’ and the reason assigned for the delay in commissioning of the project could not be attributed to it.

The Commission stated that the PPA does not mention that the date of receipt of approval of the PPA or the date on which the supplemental PPA was signed is required to establish the effective date of the project. So, the date of the execution of the supplemental PPA could not be considered as the effective date.

The Commission noted that there was a substantial delay by the developer in identifying the proper location of the project and applying for the evacuation approval, which could have been avoided if the developer had taken proper steps in identifying the lands.

It also stated that Adani Green could not establish that reasons like the delay in granting the evacuation approval, delay in grant of land conversion order, the introduction of GST, demonetization, and delay due to the wrong classification of solar modules at ports were not within its control. Hence, the claim that the delay was caused due to force majeure events cannot be accepted.

KERC also dismissed the contention that the project was ready for commissioning, but the commissioning team did not visit the spot as it was not supported by any documentary evidence.

KERC said that there was an option for the state DISCOM to terminate the PPA when the project was not commissioned within time, but this option was not exercised. The project was allowed to be commissioned by granting an extension of time.

The tariff agreed in the PPA was of ₹4.79 (0.064)/kWh, but KERC later revised the tariff to ₹4.36 (~$0.06)/kWh. Therefore, as per the PPA, Adani Green would get the reduced tariff of ₹4.36 (~$0.06)/kWh for the delayed project.

Recently, KERC issued another order denying Adani Green (UP) Limited’s requests for relief under the ‘force majeure’ clause of its PPA with CESCL. Adani Green had won 20 MW of solar projects floated by the KREDL. The projects were to be set up in the Madadi taluk of Ramanagara district.

Earlier, the Commission had issued an order directing the Mangalore Electricity Supply Company Limited to refund a penalty of ₹1.2 million (~$15,950) to Adani Green. The penalty was levied on for not producing the documentary evidence for land possession for setting up a 20 MW solar project in Malur taluk of Kolar district in the state.