Solar Developer Can't Benefit From Its Own Delay In Signing PPAs, Rules APTEL

The Appellate Tribunal for Electricity (APTEL) has ruled that a renewable energy project developer can not benefit from its own delay in signing the Power Purchase Agreement (PPA). The order from the apex regulator came to the fore when a renewable energy company approached APTEL seeking its intervention in a similar case. The company (Krishna Windfarms Developers Private Limited) sought to declare delays citing force majeure reasons in the commissioning of its solar project in Maharashtra. 

APTEL dismissed the appeal filed by Krishna Windfarms Developers Private Limited, upholding an earlier order of the Central Electricity Regulatory Commission (CERC) that allowed the encashment of bank guarantees and a tariff reduction for a delayed solar project.

The dispute relates to a 10 MW solar photovoltaic project in Maharashtra, awarded under the Jawaharlal Nehru National Solar Mission (JNNSM) by Solar Energy Corporation of India (SECI). The core issue before the Tribunal was whether the project was commissioned within the contractually stipulated timeframe and whether SECI was justified in invoking Rs 3 crore worth of performance bank guarantees and revising the applicable tariff.

Effective Date Dispute

SECI had issued a Letter of Intent (LoI) to the developer on March 10, 2016, requiring execution of the Power Purchase Agreement (PPA) by April 10, 2016. However, the PPA was eventually signed on August 3, 2016.

Krishna Windfarms argued that the 13-month commissioning period should be calculated from the actual signing date of the PPA, which would make the project’s commissioning onAugust 11, 2017 compliant. SECI, however, maintained that the contract explicitly defined April 10, 2016 as the “Effective Date,” fixing the Scheduled Commercial Operation Date (SCOD) at May 10, 2017.

APTEL agreed with SECI, ruling that the developer could not derive an advantage from its own delay in executing the agreement. The Tribunal held that specific contractual clauses defining the effective date prevailed over general provisions and were binding on both parties.

"We are in agreement with the arguments on behalf of SECI that the appellant cannot be allowed to take advantage of its own wrong in delaying the signing of the PPA by committing delay in fulfilment of conditions for signing of PPA. Therefore, the appellant cannot be permitted to contend that the timelines shall have to be reckoned from the date of signing of the PPA," the order said. 

Force Majeure Claims Rejected

The developer sought condonation of a 93-day delay by invoking Force Majeure, citing:

• Disruptions caused by demonetization in 2016,

• Delays in obtaining government approvals for the purchase of agricultural land, and

• Late execution of the Power Sale Agreement (PSA) between SECI and Maharashtra State Electricity Distribution Company Limited (MSEDCL).

The Tribunal rejected all claims, noting that Krishna Windfarms failed to issue the mandatory 7-day notice required under the PPA to invoke Force Majeure. It further held that demonetization did not automatically justify an extension of commissioning timelines, while land acquisition and statutory approvals were foreseeable obligations of the developer.

Liquidated Damages and Tariff Cut Upheld

Given the delay, APTEL upheld SECI’s right to: encash performance bank guarantees amounting to Rs 3 crore, and reduce the project tariff by 1.5 paise per unit, as the delay exceeded the three-month grace period allowed under the PPA.

The Tribunal observed that the liquidated damages specified in the contract represented a genuine pre-estimate of loss, and SECI was not required to establish actual financial damage to enforce them.

In its order dated,  APTEL termed the appeal“devoid of merit” and dismissed it in its entirety, reaffirming the enforceability of contractual timelines and penalties in renewable energy projects.