BLACKLIST ERRING GREEN FIRMS

The Wind and Solar plant developers had entered into a tariff war by quoting low rates which have now
become an impediment to them. Little did they realize that, while willingly quoting such low rates in
open auction will challenge the viability of these projects. Our country at the same time has embarked
into activities to make India one of the largest clean energy programme based on the jobs awarded.
India’s declining clean-power tariffs have stalled 16.8 GW of awarded solar and wind projects. The cash
strapped DISCOMS are shopping for lower clean energy tariffs and are reluctant to execute power
supply agreements for the projects unless the rates are low which the developers are finding to be
unviable. The withdrawal activity picked up pace when some wind-energy developers sought low-cost
exit options for projects which they found to be unviable.
This will leave the country in an embarrassing position. As such the expenditure department of the
finance ministry has issued instructions on invocation of the force majeure clause due to pandemic by
which the contract period has been extended by more than 3 months but less than 6 months. The
pandemic being cited as a reason for exit by many green developers are thus not acceptable to the
Government as they had quoted lower rates and based on that the Government has made
commitments to the world at large. The government has planned to blacklist such firms who are trying
to explore termination of power purchase agreements without encashment of bank guarantee stating
Covid-19 as an excuse to exit projects that they have been awarded. The Ministry of New and
Renewable Energy (MNRE) has taken a dim view of such practices as it can impact India’s green-energy
plans. Exiting does not appear to be a solution as Government will not allow it after making commitment
to the World. Instead of exiting, such firms can seek intervention of the government like land allocation
policies, delay in arriving at electricity tariffs and PPA adoption by state electricity regulators, payment
delays and financing and transmission related charges. There are terms and conditions that need to be
followed as per the terms of PPA.
This will affect India’s plans to have 175 GW of clean energy capacity by 2022 including 100GW of solar
and 60GW of wind power.