Regulator Restrains SECI from Encashing Solar Developer’s Bank Guarantee
The floating solar projects were delayed due to force-majeure events
SECI had invoked the encashment of the performance bank guarantee (PBG) due to delays in completing 150 MW grid-connected floating solar power projects.
The Commission acknowledged that the COVID-19 pandemic and delays in approving tariffs and power procurement processes caused the delay.
ReNew Solar Power and Auxo Sunlight won an auction to build 150 MW of floating solar projects on Rihand Dam, but they faced delays due to nationwide lockdowns and supply chain issues. The developers had submitted ₹1.13 million (~$13,651)/MW as PBG.
They requested an extension of financial closure and commissioning of the project from the Solar Energy Corporation of India (SECI), which was granted.
However, the developers said that SECI had delayed the submission of the tariff adoption petition to the appropriate commission. As a result, the developers’ request for a timeline extension was denied by the Commission.
The developers then informed SECI that their obligations under the power purchase agreement (PPA) were suspended due to the delays and the lockdowns following the second wave of COVID-19.
SECI then asked the developers to sign an undertaking relinquishing certain contractual rights to obtain an extension, which the developers found to be in violation of the PPA and the Ministry of New and Renewable Energy’s COVID-19 relief proposals.
The developers then requested an extension of project timelines from SECI, which was denied. The agency told the developers that they had not achieved financial closure, which could lead to the encashment of the PPA.
In response, the developers filed a petition with the Allahabad High Court seeking an extension of project timelines and the non-encashment of PBG. The court instructed the parties to approach the Uttar Pradesh regulator and issued an interim order halting the encashment of the PBG.
The Commission found that COVID-19, monsoons, late delivery of 100 MW of floaters, and fulfillment of other purchase orders along with delayed execution of water and land lease agreements contributed to the delay in the implementation of the project.
Further, the Commission said that the delays in signing the PPA and PSA, filing a petition for tariff determination, and power procurement have all led to the delay in commissioning and cannot be attributed to the developer.
The Commission ordered the petitioners to be released from the PPA and PSA.
Also, as the delay was caused by a force majeure event and not due to the developers’ fault, SECI should release the PBG back to the developers, the Commission said.
UPERC had rejected a solar developer’s plea seeking an extension of the commissioning deadline on the grounds of force majeure events and said that the developer was liable to pay liquidated damages for the delay in commissioning the project.
Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.