APTEL Quashes TNERC Order Rejecting Extension for 50 MW Solar Project

Bloom Energy Revenue Jumps 165% YoY in Q2, Beats Analysts’ Expectations

Zenobē Acquires Battery Energy Storage Project Developer sdp energie

Thermal Battery Company Antora Energy Raises $550 Million in Funding

Tata Power Begins Work on 800 MW Wind-Solar Project in Andhra Pradesh

Cabinet Clears ₹50 Billion PM Surya Sarovar Floating Solar-Storage Program

Solar Module Sales Lift Waaree’s Q1 Revenue; New US Production Lines Soon

First Solar Reaffirms 2026 Guidance Despite 4% YoY Q2 Revenue Fall

Uttar Pradesh Draft Electricity Grid Code Focuses on Renewables, Storage

ACME’s Revenue Up 68% in Q1 on Higher Electricity Sales

<table id="amazon-polly-audio-table">
						<tr>
						<td id="amazon-polly-audio-tab">
							<div id="amazon-ai-player-label">Listen to this article</div>
							<div id="amazon-ai-player-container">
			<audio class="amazon-ai-player" id="amazon-ai-player" preload="none" controls controlsList="nodownload" >
				<source type="audio/mpeg" src="https://cms.mercomindia.com/wp-content/uploads/2026/07/amazon_polly_102317.mp3?version=1785505466">
			</audio>
		</div>
							<div id="amazon-polly-subscribe-tab"></div>
							<div id="amazon-polly-by-tab"></div>
						</td>
						</tr>
					</table>The Appellate Tribunal for Electricity (<a href="http://www.aptel.gov.in/en" target="_blank" rel="noopener">APTEL</a>) has set aside an order of the Tamil Nadu Electricity Regulatory Commission (TNERC) that had refused to grant a project-specific extension of the commercial operation date (COD) to a 50 MW solar project.
The Tribunal remanded the matter to TNERC for fresh consideration after finding that the Commission failed to examine one of the developer&#8217;s primary arguments that Cyclone Gaja and the consequential heavy rains that affected the Tamil Nadu coast in November 2018 constituted a force majeure event that delayed the project.
APTEL also directed TNERC to reconsider the related issues regarding Tamil Nadu Generation and Distribution Corporation&#8217;s (TANGEDCO) encashment of performance bank guarantees and the developer&#8217;s liability to pay liquidated damages. The Commission has been directed to pass a fresh order within three months after providing both parties an opportunity to be heard.
Background 
The dispute traces back to a 2017 tender issued by TANGEDCO to procure 1,500 MW of solar power through tariff-based competitive bidding.
VSR Solar Power emerged as the lowest bidder and received a letter of intent on January 2, 2018. The company furnished performance bank guarantees totaling ₹100 million (~$1.05 million) and executed a 25-year power purchase agreement (PPA) with TANGEDCO on March 22, 2018.
Under the agreement, the project had to achieve commercial operation within 12 months, making March 21, 2019, the scheduled COD.
Following execution of the PPA, VSR finalized its project location at Vilathikulam in Tuticorin district, purchased the land, and began preliminary site development. The developer subsequently sought TANGEDCO&#8217;s approval to shift the project location from Virudhunagar district to Vilathikulam, which was approved along with the project&#8217;s grid connectivity arrangement.
VSR argued that two major developments disrupted the project&#8217;s progress.
The first was the safeguard duty imposed by the Ministry of Finance on July 30, 2018, on imported solar modules and panels from countries including China, Taiwan, and Malaysia.
According to the developer, the levy increased module prices by approximately 25%, substantially affecting project costs. It also noted that the Ministry of Power subsequently issued directions recognizing the safeguard duty as a change-in-law event for solar projects eligible for pass-through compensation.
The second, and central, ground was the impact of Cyclone Gaja and the accompanying heavy rains that struck the Tamil Nadu coast in November 2018. VSR submitted that the project site suffered severe flooding, preventing access to the land and forcing it to repeat preliminary work that had already been completed. The company claimed the project cost increased by approximately 17% because of these events.
According to VSR, the project site consisted of black cotton soil, making it particularly susceptible to prolonged water stagnation after heavy rainfall. The developer argued that this site-specific characteristic distinguished its project from other solar projects in the region.
On December 18, 2018, VSR sought a four-month extension of the COD from March 21, 2019, to July 21, 2019. TANGEDCO rejected the request on January 7, 2019, stating that under the tender conditions, the project could still be commissioned by January 21, 2020, although contractual consequences for delay would apply.
Meanwhile, VSR entered into a memorandum of understanding with the Tamil Nadu government in January 2019, under which TANGEDCO agreed to provide infrastructure and regulatory support for the project. Relying on these assurances, the developer placed engineering, procurement, and construction orders for the project.
However, in September 2019, TANGEDCO initiated action to invoke the performance bank guarantees because of the commissioning delay and encashed ₹51 million (~$534,637). VSR subsequently requested permission to complete the project by June 26, 2020. TANGEDCO did not respond to that request at the time and later rejected the extension request in December 2019. It subsequently directed the developer to furnish a fresh performance bank guarantee of ₹76 million (~$796,714) for the continuing delay.
VSR then approached TNERC seeking an 18-month extension of the COD until September 21, 2020. The company also requested the Commission to restrain TANGEDCO from enforcing the bank guarantees and to direct the refund of the amount already encashed.
TANGEDCO opposed the petition, arguing that the cyclone did not justify an extension. It submitted that five other developers had successfully commissioned a combined 500 MW of solar projects in Tuticorin district within the scheduled timeline under the same tender without seeking any extension due to Cyclone Gaja or heavy rainfall.
According to TANGEDCO, the reasons cited by VSR merely reflected its own omissions in complying with the contractual schedule rather than any genuine force majeure event.
Tribunal&#8217;s Analysis 
The Tribunal found that TNERC had <a href="https://www.mercomindia.com/solar-developers-extending-deadline-rejected?" target="_blank" rel="noopener">failed</a> to adjudicate one of the principal disputes raised before it.
APTEL observed that VSR had specifically pleaded before the Commission that the cyclone and heavy rains constituted an unforeseen natural disaster that delayed the project. TANGEDCO expressly denied those allegations, while VSR reiterated its position in its rejoinder, explaining the unique characteristics of the project site and the prolonged flooding caused by black cotton soil.
Despite these detailed pleadings, the Tribunal found that TNERC had merely reproduced portions of the parties&#8217; submissions without examining whether the cyclone actually qualified as a force majeure event under the PPA.
The Tribunal noted that although the Commission had framed an issue relating to force majeure, its analysis focused exclusively on the safeguard duty imposed on imported modules. There was no discussion on the alleged impact of Cyclone Gaja or the consequential heavy rains, even though those events formed one of the principal grounds for seeking an extension.
According to APTEL, once a material factual dispute is raised in a petition, denied by the respondent, and reaffirmed in the rejoinder, the adjudicating authority is obligated to evaluate the evidence and return a reasoned finding. Ignoring one of the principal grounds advanced by a party amounts to a failure to adjudicate the dispute properly.
The Tribunal observed that TNERC&#8217;s order reflected a lack of application of mind because parts of its analysis relied on provisions extracted from power purchase agreements executed by other developers rather than the agreement signed between VSR and TANGEDCO. It found that paragraphs discussing the referenced commissioning timelines in unrelated PPAs created a factual mismatch, further undermining the validity of the order.
Since the determination of TANGEDCO&#8217;s entitlement to encash the performance bank guarantees and recover liquidated damages depended upon whether the delay resulted from a force majeure event, APTEL declined to decide those issues itself.
Instead, the Tribunal set aside TNERC&#8217;s order and remanded the matter to the Commission for fresh consideration. It directed TNERC to specifically examine whether Cyclone Gaja and the consequential heavy rains qualified as force majeure under the PPA and thereafter reconsider the consequential issues relating to the encashment of the bank guarantees and the recovery of liquidated damages.
Subscribe to Mercom&#8217;s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don&#8217;t miss any critical updates from the renewable industry.

force-majeuere

Get the most relevant India solar and clean energy news.

RECENT POSTS