In a hearing relating to an order[1] dated 27th March 2024 before the regulatory commission, Scatec India Renewables One Private Limited, herein referred to as the SIROPL, filed a petition under section 79(1)(b) and (f) of the Electricity Act, 2003, seeking a declaration of change in law and entitlement to compensation under the Power Purchase Agreement (“PPA”). The case involved a dispute between Scatec India Renewables One Private Limited and Solar Energy Corporation of India Limited, referred to as SECI, regarding the Ministry of Power’s Order dated 9th June 2023 and its impact on the power project.
The present case revolves around an order dated 9th June, 2023, issued by the Ministry of Power (MoP), which inter alia introduced restrictions on the waiver of Inter-State Transmission System (“ISTS”) charges, crucial for the economic viability of SIROPL's wind power project.
The project, which aimed at establishing a 300 MW wind power facility, formed part of India's ambitious endeavours to enhance renewable energy capacity. To incentivize investment in this sector, the government had previously offered waivers on ISTS charges for transmitting electricity generated from solar and wind sources through inter-state transmission systems. This policy played an important role in mitigating transmission costs for renewable energy developers, thereby promoting growth in the sector. However, subsequent orders by the MoP, imposed limitations on the waiver of ISTS charges, directly impacting projects like SIROPL's. The order stipulated that the waiver would only apply to projects commissioned up to 30th June, 2025, with further restrictions on extensions due to force majeure or delays by government agencies.
Thus, SIROPL argued that this order constituted a "Change in Law" under the terms of its Power Purchase Agreement (PPA), significantly affecting its project completion timeline and financial obligations, thereby entitling it to compensation for delays beyond the waiver period of ISTS charges. Additionally, it highlighted the challenges posed by the unavailability of the Grid Sub-Station (GSS), a critical component for the project's connectivity and operationalization.
SIROPL, represented by its learned counsel, contended that the MoP's order dated 9.6.2023, introducing restrictions on ISTS charges waivers, constituted a "Change in Law" event under the PPA. SIROPL argued that this change fundamentally altered the bidding conditions and posed substantial challenges to the project's viability and implementation timeline. Moreover, SIROPL highlighted the uncertainty surrounding the availability of the GSS, which further compounded the challenges faced by the project.
On the other hand, SECI, represented by its counsel, vehemently opposed SIROPL's request to link the proceedings of the present petition with the tariff adoption proceedings under Petition No. 337/AT/2023. SECI argued that the tariff adoption proceedings should not be delayed due to Change in Law claims. They argued that the PPA explicitly allocated transmission charges and losses, and any delay in project completion should not affect tariff adoption. SECI also highlighted that the PPA was executed after the issuance of the MoP's order, making it inappropriate to delay the adoption proceedings.
After hearing the arguments from both parties, the Ld. CERC deliberated on the issues raised in the case. The commission identified two primary issues for consideration:
On the first issue, the CERC analysed the contentions of both parties and concluded that the concerns raised by SIROPL regarding the impact of the MoP's order on the project's viability were premature. The commission noted that the delay in the adoption proceedings had not yet breached the buffer period provided under the MoP's order for the waiver of ISTS charges. Additionally, the apprehensions raised by SIROPL regarding the availability of the GSS were deemed premature, as the SCOD of the GSS was well within the buffer period provided under the MoP's order. Consequently, the CERC decided to hear the present petition independently without tagging it with the tariff adoption proceedings.
Moving on to the second issue, the CERC examined SIROPL's request for an extension of the FC date until the determination of the applicability of ISTS charges and certainty on GSS availability. While acknowledging the provisions of the PPA regarding extensions in the FC timeline due to force majeure events or delays in tariff adoption, the commission found no basis to extend the Financial Closure deadline based on the Petitioner's apprehensions about ISTS charges and GSS availability. The commission emphasized that the obligations of SIROPL under the PPA could not be suspended pending the resolution of disparate prayers before the commission. Consequently, the CERC declined to grant the interim reliefs sought by SIROPL in Petition No. 26/MP/2024.
The case exemplifies the complexities inherent in the renewable energy sector, where policy shifts and regulatory decisions can significantly impact project economics and timelines. It emphasized the need to maintain regulatory certainty and adhere to timelines in renewable energy projects. While acknowledging the Petitioner's concerns, the commission found them premature and unsupported by the current circumstances. The decision highlights the importance of clear contractual provisions and adherence to established timelines in resolving disputes in the renewable energy sector.
[1] Petition No. 26/MP/2024
