MERC Refrains MSEDCL From Taking Coercive Action Against Solar Power Developer


Until the disagreement over financial closure and the scheduled date of commercial operation is resolved, the Maharashtra Electricity Regulatory Commission (MERC) has ordered the Maharashtra State Electricity Distribution Company (MSEDCL) to forbear from taking any coercive action against, Avaada MH Sustainable, a solar power generator.


The ruling was issued in response to an interlocutory application made by Avaada MH Sustainable, which asked for a postponement of the 250 MW solar power project’s scheduled commercial operation date.


The solar developer first petitioned for an extension, alleging a few instances of force majeure.


According to Avaada, it has finished 200 MW of the project’s capacity and is currently working on finishing the remaining 50 MW, which is in the advanced stage of commissioning.


For the delay, the petitioner said, MSEDCL stalled in completing the power purchase agreement (PPA).

Further, delayed connectivity was granted to the project by the Maharashtra State Electricity Transmission Company (MSETCL), which also took too long in accepting the transmission infrastructure design and program.

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Additionally, the pandemic of COVID-19 and flood-like situations at the project location due to heavy rainfall also accounted for the project delay.

In its application, Avaada claimed that MSEDCL had unilaterally changed a PPA clause that reduced the timeframe for the financial closure from 18 to 12 months.

MSEDCL explained that the financial closing date (18 months instead of 12 months) cannot be taken into consideration due to a typographical error in the PPA dated August 10, 2021.

The Commission noted that the primary point of contention centered on the timeframes for anticipated commercial operation and financial closure as stated in the PPA and the request for selection (RfS).

According to the PPA’s terms, the project must be commissioned within 15 months inside the solar park and 18 months outside the solar park after the PPA’s effective date of July 17, 2020.

According to MERC, the solar power producer reportedly reached financial closure on December 27, 2021, which MSEDCL did not contest.

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The Commission considered the petitioner’s assertion that MSEDCL may impose liquidated damages on the applicant or may use its right to encash the performance bank guarantee (PBG).

The Commission further stated that, in accordance with PPA requirements, the penalty sum must be repaid to the petitioner within 30 days after the commissioning date if the Commission grants the scheduled operation date extension in the main issue.

Therefore, there was no need to levy such a penalty as the fundamental disagreement had yet to be resolved about the date of financial closure and the date of the projected commercial operation.

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