Uttar Pradesh Electricity Regulatory Commission (UPERC) identified the COVID-19 epidemic, delays in tariff approval, and issues with electricity procurement procedures as contributing factors in project delayed completion, thus, ordering Solar Energy Corporation of India (SECI) to refund the performance bank guarantee to ReNew Power’s subsidiaries.
Because of delays in finishing 150 MW grid-connected floating solar power projects, SECI has called for the encashment of the performance bank guarantee (PBG). The developers had provided PBG of Rs. 1.13 million/MW.
Earlier, after winning an auction to build 150 MW of floating solar projects on Rihand Dam, ReNew Solar Power and Auxo Sunlight encountered delays because of lockdowns across the nation and supply chain concerns.
They asked SECI for an extension of the project’s financial closure and commissioning, which was approved.
However, the solar developers claimed that SECI had postponed submitting the petition for the approval of the tariff to the relevant body. As a result, the Commission rejected the developers’ request for a deadline extension.
In order to seek an extension, SECI then required the developers to sign an agreement waiving a number of contractual rights, which the developers later discovered to be against the power purchase agreement (PPA) and the COVID-19 relief recommendations of the Ministry of New and Renewable Energy (MNRE).
The developers, thereafter, asked SECI for an extension of the project schedules, but they were turned down.
The agency informed the developers that they had not reached financial closure, leading to the encashment of the PPA. Therefore, in response, the developers petitioned the Allahabad High Court for an extension of the project deadlines as well as for the PBG to not be cashed in.
The court granted an interim injunction stopping the encashment of the PBG and directed the parties to approach the Uttar Pradesh regulator.
The Commission noted that SECI should return the PBG to the developers because the delay was the result of a force majeure incident and not the developers’ fault.
The Commission determined that factors such as COVID-19, the monsoons, delayed fulfillment of 100 MW of floaters, and other purchase orders, including delays in the signature of water and land leasing agreements, all contributed to the project’s implementation delay.
In addition, UPERC reasoned that the developer was not to blame for the delays in commissioning caused by the signing of the PPA and PSA, submitting a petition for tariff determination, or procuring electricity. Thus, the petitioners were ordered to be freed from the PPA and PSA.