ACME Solar has decided to terminate a contract with government agencies to supply power at record low tariff citing Covid-19 crisis and its heavy toll on the economy.
In 2018 the firm bagged this 600 MW project in Rajasthan at a historic low rate of Rs 2.44 per unit. The solar power developer in its petition to the Central Electricity Regulatory Commission (CERC) cited the pandemic as one of the reasons for terminating the agreement.
The company urged the CERC to prevent SECI and PGCIL from encashing the bank guarantee and letter of comfort submitted for the project.
Central Electricity Regulatory Commission (CERC) heard the matter and issued an interim direction to “SECI and PGCIL not to take any coercive measure against” the company till the next date of hearing.
ACME Solar said it had terminated the PPA dated December 2018 executed with SECI “on account of the force majeure events”.
ACME had signed a power purchase agreement (PPA) with SECI and a long-term access agreement with PGCIL.
The company in the petition cited these reasons: “Status quo orders by the Rajasthan High Court qua land on which Fatehgarh substation was to be constructed; the outbreak of Covid-19 and its adverse impact on manufacturing facilities of suppliers since December 2019, including lockdowns in China and India; and delay in the commissioning of associated transmission network elements by other transmission service providers.”
J Sagar Associates (JSA) is representing ACME in proceedings pertaining to termination of solar PPAs with SECI and Discoms due to delays and disruption caused by COVID.
“With Chinese manufacturers unable to commit to a firm timeline and uncertainty over resumption of supplies, most projects will be delayed beyond the scheduled commissioning date. COVID related disruptions will also impact cost of such projects. That coupled with the decrease in power demand and financial health of discoms may have a significant impact on growth in the renewable sector,” Vishrov Mukerjee, Partner at JSA said.
“The projects have already been delayed by 15 months and further delay will continue on account of uncertainty due to Covid-19,” ACME said.
Last year too the firm terminated a 600 MW project, it then told NTPC that the project it won in an auction is no longer feasible as the power purchase agreement (PPA) stands terminated in the absence of necessary regulatory approvals and has asked the state-run power major to return its bank guarantee.
Acme had won the project in an auction conducted by NTPC in August 2018 where it quoted a tariff of Rs 2.59 per unit. Other winners in the auction for 2,000 MW of projects were Azure Power, Softbank-backed SB Energy and Shapoorji Pallonji whose tariffs were also in the range of Rs 2.59-2.60 per unit.