SkyPower Global has found itself in a legal tussle with the government of Madhya Pradesh and could end up losing two of the three 50 megawatt solar power projects it won in the state’s competitive auction.
Madhya Pradesh Power Management Company Limited (MPPMCL) has scrapped the power purchase agreements with two projects of 50 megawatts each owned by subsidiaries of SkyPower Global, citing delays in project commissioning.
While MPPMCL claims that the company failed to commission the project within the stipulated 16 months, SkyPower claims that it had completed the projects on time and had even submitted an application for grid connection four days before it received the project termination order.
SkyPower had secured three projects of 50 megawatts of capacity each through a competitive auction under the state’s solar power policy. All the projects were secured at tariffs around Rs 5.00/kWh (7.8¢/kWh) which are among the lowest solar tariffs in India at that time.
Another solar power project developer, ReNew Power Ventures has also been served a termination letter for its 51 megawatt project. MPPMCL claims that ReNew Power failed to complete land acquisition on time. The company, however, claims that it managed to achieve commercial operation on time.
ReNew Power approached the Madhya Pradesh High Court challenging the MPPMCL termination letter and managed to secure an order against the letter. MPPMCL subsequently approached the Supreme Court against the High Court’s order where the judgment is pending.
SkyPower Global also approached the Madhya Pradesh High Court where it was advised to wait until the Supreme Court takes a call on the case between ReNew Power Ventures and Madhya Pradesh PMCL. The Supreme Court’s decision on delayed land acquisition and on-time commissioning of the project may play a critical role in several similar cases across the country.
Solar power tariffs in India have collapsed by around 73% since 2010, making solar power one of the cheapest sources of electricity in the country. This, however, seems to have caused a major disruption in operations of power utilities across India. There have been repeated cases where power utilities have forced solar power project operators to reduce their generation citing lack of transmission capacity, or have delayed monthly payments against the power generated.
More recently, power utilities have unilaterally initiated processes to renegotiate tariffs for projects auctioned several months back. Utilities in the states of Uttar Pradesh and Jharkhand forced the developers to reduce tariffs. Utilities in Andhra Pradesh recently refused to sign a power purchase agreement with a 350 megawatt solar project despite being one of the lowest priced projects in the country, stating that they had already contracted enough solar power to meet its renewable purchase obligations.