APTEL Rules In Favor Of Solar Developer Ordering NTPC To Refund Liquidated Damages For 140 MW Projects

The Appellate Tribunal for Electricity (APTEL) has delivered a judgment in favor of Solaire Surya Urja Private Limited, a solar power developer in Rajasthan, against NTPC Limited and other entities. The case arose from a dispute over the delay in the commissioning of two solar power projects with a total capacity of 140 MW. The company had sought an extension of the Scheduled Commercial Operation Date (SCOD) due to the non-availability of the required evacuation transmission infrastructure, which was under the responsibility of Rajasthan Rajya Vidyut Prasaran Nigam Limited (RRVPNL).

The appellant had entered into Power Purchase Agreements (PPAs) with NTPC in May 2016, under which the projects were scheduled to be commissioned by June 1, 2017. However, the company faced delays due to the absence of an adequate evacuation system, which prevented it from injecting power into the grid. Despite its repeated communications regarding the issue, NTPC imposed liquidated damages on the company for the delay in supplying power.

The Central Electricity Regulatory Commission (CERC), in its August 2021 order, had ruled against the appellant, holding it liable for the delay and allowing NTPC to recover liquidated damages. Dissatisfied with the decision, the company filed an appeal before APTEL.

APTEL reviewed the case and acknowledged that the delay was caused by factors beyond the control of the solar power developer. The tribunal observed that RRVPNL had not provided the necessary evacuation infrastructure in time and had even restricted the company from injecting power into the grid without prior approval. The tribunal noted that the appellant had commissioned parts of the projects much earlier but was unable to commence power supply due to the transmission constraints.

APTEL further examined the contractual clauses under the PPAs and concluded that the appellant was entitled to an extension of the SCOD under the force majeure provisions. It ruled that the appellant could not be penalized for a delay caused by external factors, such as the non-availability of the transmission system. The tribunal set aside CERC’s order and directed NTPC to refund the liquidated damages amount, if any, collected from the appellant.

The judgment highlights the importance of proper infrastructure planning for renewable energy projects and emphasizes that developers should not be penalized for delays caused by deficiencies in government agencies’ responsibilities. The ruling sets a precedent for similar cases where transmission constraints hinder the timely commissioning of renewable energy projects. The decision also reinforces the need for coordination between power developers and transmission utilities to ensure smooth project execution.