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SECI’s 1.1 GW Solar-Wind Project Stalled Due To SC’s Decision

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In yet another example concerning tariff adoption after taking into account changes in law, an important SECI Wind-Solar Hybrid project, the 1110 MW (1.1 GW) (Tranche III), may face a lengthy delay because of Supreme Court’s decision on constructing underground transmission lines in the Great Indian Bustard’s livable region.

The project, which includes Adani Renewable (600 MW), AMP Energy (130 MW), and ABC Renewables (380 MW), is subject to every change in legislation and more difficulties are raised by SC’s decision.

The letter of award to the successful bidders was released on December 31, 2020, approximately a year ago.

Even while the Central Electricity Regulatory Commission (CERC) worked tirelessly to address the difficulties raised by the rise in tax on solar inverters, changes in GST regulations, and the impact of customs duty hikes beginning in April 2022, it neglected to comment on the Supreme Court decision.

“We note that the alleged Change in Law event (i.e. the decision dated 19.4.2021 of the Honble Supreme Court in the Writ Petition (Civil) No. 838 of 2019) goes beyond the changes in the rates of Safeguard Duty, GST, and Basic Custom Duty for which the Petitioner has categorically prayed to recognize Article 12.2 of the PPAs and Article 8.2 of the PSAs at the time of tariff adoption by the Appropriate Commission.” CERC said.

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As a result, this was one problem where the parties involved were unlikely to reach an equitable agreement.

Nearly 20 GW of renewable energy projects are on hold in Rajasthan while the Supreme Court resolves the issue of underground versus overground power cables, with most power manufacturers clear that the underground cabling option is almost a non-starter mainly owing to initial high costs, and possibly even long-term maintenance costs in case of cable foibles. 

Even though the Ministry of Power, Government of India, has announced the Electricity (Timely Recovery of Costs Due to Change in Law) Rules, 2021 to facilitate quicker resolution of disputes related to Change in Law occurrences, this is unlikely to be effective in this case.

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