Supreme Court Overturns Electricity Tribunal Ruling on Renewable Energy Project Delay image for SC Judgment dated 16-10-2024 in the case of Solar Energy Corporation of In vs Wind Four Renergy Private Limi
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Supreme Court Overturns Electricity Tribunal Ruling on Renewable Energy Project Delay

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The case of Solar Energy Corporation of India Limited (SECI) vs. Wind Four Renergy Private Limited & Ors. revolved around a dispute over the extension of time for commissioning a wind power project. The Supreme Court had to decide whether the delay in operationalizing the Long Term Access (LTA) by Power Grid Corporation of India Limited (PGCIL) justified granting an extended commissioning period to the respondent, Wind Four Renergy Private Limited (WFRPL).

Background of the Case

The dispute originated from the execution of five Power Purchase Agreements (PPAs) between Wind Four Renergy Private Limited (WFRPL) and Power Trading Corporation (PTC) under SECI’s renewable energy initiative. The key details of the case are:

  • The Letter of Award (LoA) for the project was issued on April 5, 2017.
  • The Scheduled Commercial Operation Date (SCOD) was initially set for October 4, 2018.
  • The agreement allowed for an extension of nine months (with liquidated damages) until July 5, 2019.
  • The Long Term Access (LTA) needed for grid connectivity was only operationalized on April 14, 2019, causing delays.
  • The Ministry of New & Renewable Energy (MNRE) issued a letter on October 22, 2019, allowing a 60-day extension beyond LTA operationalization.

Central Electricity Regulatory Commission (CERC) Ruling

WFRPL approached the Central Electricity Regulatory Commission (CERC), arguing that they were not informed about the LTA operationalization until November 22, 2019. Based on this claim, CERC granted:

  • An extension of 132 days beyond the allowable period.
  • The revised commissioning date was set at October 23, 2019.

SECI accepted the CERC ruling and implemented the revised timeline.

Appeal to the Appellate Tribunal for Electricity (APTEL)

WFRPL was still dissatisfied and filed an appeal before the Appellate Tribunal for Electricity (APTEL), which ruled in their favor:

  • APTEL directed that the 132-day extension should start from January 11, 2022 (the date of the APTEL judgment), effectively granting an indefinite extension.
  • APTEL’s ruling disregarded the CERC order and the timelines in the PPA.

Legal Issues Considered by the Supreme Court

  • Was WFRPL entitled to a further extension beyond the 132-day period granted by CERC?
  • Was APTEL’s decision to start the extension from January 11, 2022, legally valid?
  • What was the correct methodology for computing the commissioning deadline?

Petitioner’s (SECI’s) Arguments

SECI contended:

  • The 132-day extension granted by CERC was sufficient and in accordance with MNRE’s policy.
  • WFRPL was aware of the LTA operationalization in April 2019 and could not claim further delays.
  • APTEL’s ruling granted an irrational extension that was contrary to the PPA’s terms.
  • The extension should be calculated from the date of LTA operationalization, not from APTEL’s judgment.

Respondent’s (WFRPL’s) Arguments

WFRPL argued:

  • They were not notified of LTA readiness until November 22, 2019.
  • The 132-day extension should begin from January 11, 2022, the date of APTEL’s judgment.
  • Further extensions were necessary due to delays in regulatory approvals.

Supreme Court’s Observations

1. Validity of the 132-Day Extension

The Court noted that CERC had correctly applied MNRE’s guidelines, stating:

“The additional time granted under the MNRE letter was 60 days beyond the LTA operationalization. CERC further granted 132 days, which was sufficient.”

2. Incorrect Computation by APTEL

The Court found APTEL’s decision to start the extension from January 11, 2022, rather than from April 14, 2019, was legally unsound:

“The objective of project deadlines is to ensure timely renewable energy supply. Extending the deadline indefinitely defeats this purpose.”

3. Impact on Renewable Energy Pricing

The Court emphasized that allowing unjustified delays in renewable energy projects affects pricing and efficiency:

“Tariffs of green energy have substantially decreased over time. Allowing arbitrary extensions disrupts market pricing and investment confidence.”

Final Judgment

The Supreme Court ruled:

  • The appeal was allowed, and APTEL’s order was set aside.
  • The CERC order of March 8, 2021, granting a 132-day extension, was restored.
  • WFRPL was required to comply with the CERC ruling and could not claim further extensions.
  • SECI was allowed to recover Rs. 10 crores that had been refunded to WFRPL, along with 12% annual interest.

Conclusion

The Supreme Court’s ruling in Solar Energy Corporation of India Limited vs. Wind Four Renergy Private Limited & Ors. sets a crucial precedent for renewable energy projects:

  • Extensions for project commissioning must follow established regulatory guidelines.
  • Tribunals cannot arbitrarily extend deadlines beyond what is permitted in contracts.
  • Delays in renewable energy projects affect pricing, efficiency, and investment stability.

This judgment reinforces the importance of adhering to contractual deadlines and regulatory mandates to maintain fairness and efficiency in the renewable energy sector.


Petitioner Name: Solar Energy Corporation of India Limited (SECI).
Respondent Name: Wind Four Renergy Private Limited & Ors..
Judgment By: Justice Sanjiv Khanna, Justice Dipankar Datta.
Place Of Incident: New Delhi.
Judgment Date: 16-10-2024.

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