Dispute Over One Day Commissioning Delay Causes 30% Solar Tariff Reduction in Karnataka
The solar developer is now entitled to the reduced tariff and is liable for the payment of the liquidated damages.
October 25, 2018
The Karnataka Electricity Regulatory Commission (KERC) has 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.
The Bangalore Electricity Supply Company Limited (BESCOM) was the respondent in the petition.
In its order, KERC ruled that since it was the developer that delayed the project commissioning, he is not entitled to the tariff as per the signed PPA. Previously, the developer was eligible to a tariff of ₹6.10 (~$0.08)/kWh as per the PPA. After the ruling, the tariff stands at ₹4.36 (~$0.06)/kWh, about a 30 percent cut based on the current commercial operation date.
Emmvee Photovoltaic Power Private Limited was the successful bidder in the auction conducted by the Karnataka Renewable Energy Development Limited (KREDL) to develop 20 MW of solar power projects at Debbaravaripalli village, in Bagepalli taluk of Chikkaballapura district and 10 MW of solar power projects at Nagora village, in Bidar rural taluk of Bidar district. Emvee then promoted and incorporated the ES Sun Power Private Limited and ES Solar Private Limited, as the special purpose vehicles for developing the two projects in the above-said places.
BESCOM stated the scheduled commissioning date for the projects was on or before October 16, 2017, whereas, according to the developer, the commissioning date was October 17, 2017 a one-day difference.
The petitioner had produced a commissioning certificate showing that the project was commissioned on October 16, 2017. However, the KERC ruling stated,
“The developer could have produced the downloaded data of the main meter and the check meter pertaining to 16.10.2017, to establish that there was injection of power into the grid on 16.10.2017 itself. In the absence of it, it is difficult to hold that the project was interconnected and synchronized, sufficiently well in advance, when there was sufficient solar irradiance to produce the solar power and inject the same into the grid. Therefore, we hold that, the injection of power from the solar power project involved in this case, started only on 17.10.2017.”
In its order, KERC also clarified that the injection of power into the state grid from a solar power project is essential in order to declare the project as commissioned, and the terms “Commissioning of the Project” and “Commercial Operation of the Project” are equivalent.
Consequently, KERC rejected the petition. The commission said in its ruling, “The consequence of delay in commissioning of the project beyond the scheduled commissioning date would be payment of the reduced tariff to the developer. Consequently, these solar power projects are entitled to the reduced tariff and liable for payment of the liquidated damages”.
The ruling is extremely harsh considering the dispute is based on a matter of hours and the fact that the developer had some evidence showing power injection activity.
However, this ruling should send a warning to all developers that gamble and wait until the very last day to commission a project.
KERC recently passed a similar ruling in which it dismissed the petition filed by Marakka Solar Power Project LL.P stating that it is not entitled to relief under force majeure (unforeseeable) events.
Image Credit: Flickr