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					</table>The Appellate Tribunal for Electricity (<a href="https://www.aptel.gov.in/en" target="_blank" rel="noopener">APTEL</a>) has upheld the encashment of performance guarantees by the Tamil Nadu Generation and Distribution Company (<a href="https://www.tangedco.org/en/tangedco/" target="_blank" rel="noopener">TANGEDCO</a>) due to delays by a solar developer in commissioning a 1.5 GW project.
However, it referred the issue of liquidated damages to the Tamil Nadu Electricity Regulatory Commission (TNERC) for fresh determination. It said TANGEDCO cannot retain liquidated damages without establishing the actual loss caused by delays in commissioning the solar project.
Background
In 2017, TANGEDCO invited bids to procure 1,500 MW of solar power on a long-term basis. Raasi Green Earth Energy emerged as the lowest bidder.
TANGEDCO issued a letter of award to Raasi in August 2017. Under the tender conditions, the developer submitted two performance bank guarantees (PBGs) totaling ₹200 million (~$2.1 million).
The parties signed a 25-year power purchase agreement (PPA) requiring the project to be commissioned by September 25, 2019. The PPA provided for proportionate encashment of the performance bank guarantees in the event of commissioning delays.
In July 2018, the Ministry of Finance imposed a safeguard duty of over 25% on imported solar modules and panels, including those from China, Taiwan, and Malaysia.
Raasi said the duty increased module costs and affected project implementation and sought a tariff revision. However, TANGEDCO rejected the request.
Later, Raasi sought approval to commission at least 50% of the contracted capacity and requested permission to evacuate electricity at the 33/110 kV level instead of 230 kV. TANGEDCO agreed to consider part commissioning but rejected the proposed change in evacuation voltage.
In 2019, Raasi submitted two additional letters seeking an extension of the project’s commercial operation date, citing the sudden imposition of a safeguard duty on imported modules. TANGEDCO did not respond to these extension requests before the contractual commissioning deadline.
The project was not commissioned by the scheduled deadline of September 25, 2019. This delay initially triggered proportionate encashment of the PBGs. Failure to commission within 29 months permitted full encashment, while delays beyond 34 months resulted in automatic termination of the PPA.
In 2020, Raasi approached TNERC, seeking a project-specific extension of the commercial operation date (COD), cancellation of TANGEDCO’s rejection letters, and protection against the encashment of its bank guarantees. The petition referred to safeguard duty as the reason for the delay.
While the petition was pending, TANGEDCO encashed PBGs amounting to ₹150 million (~$1.57 million). Raasi mentioned this development in its rejoinder before the TNERC but did not amend the original petition or formally add a prayer seeking repayment of the encashed amount.
In February 2021, TNERC rejected Raasi’s request for a COD extension. It held that the project had not been commissioned within the mandated maximum period, resulting in the automatic termination of the PPA. TANGEDCO was entitled to encash the PBGs.
Raasi then approached APTEL challenging TNERC’s decision. It submitted that TANGEDCO should refund the encashed PBG, as it did not incur any loss due to the solar project’s non-commissioning.
It also argued that TANGEDCO could not claim liquidated damages without proving actual loss from the project delay.
It contended that the liquidated damages clause under the PPA only prescribed the maximum amount payable and that compensation could not be awarded without determining the actual loss suffered by TANGEDCO.
Tribunal’s Analysis
The Tribunal upheld TANGEDCO’s encashment of ₹150 million (~$1.57 million) from PBGs, holding that the right to encash arose upon Raasi&#8217;s failure to meet the PPA’s commissioning deadline.
APTEL also noted that Raasi had not amended its TNERC petition to seek a refund.
However, the Tribunal held that liquidated damages could not be awarded automatically without examining the loss suffered.
It partly allowed the appeal, setting aside TNERC’s finding on liquidated damages, and remanded the matter to the Commission to determine whether TANGEDCO had suffered any loss.
Recently, APTEL partly <a href="https://www.mercomindia.com/aptel-orders-fresh-tariff-review-for-10-mw-rooftop-solar-project-in-punjab" target="_blank" rel="noopener">allowed</a> a solar installer’s appeal against the Punjab State Electricity Regulatory Commission’s 2018 order that reduced the tariff for a 10 MW rooftop solar project from ₹7.59 (~$0.0795)/kWh to ₹5.09 (~$0.0533)/kWh.
Subscribe to Mercom’s real-time <a href="https://www.mercomindia.com/product/mercoms-renewable-energy-regulatory-updates" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

APTEL Upholds Guarantee Encashment in Delayed 1.5 GW Tamil Nadu Solar Project

In the 1,500 MW Tamil Nadu Generation and Distribution Corporation (TANGEDCO) tender, Raasi Green Earth Energy won the bid to develop 100 MW of solar by quoting Rs.3.47 (~$0.05364)/unit. This is the lowest solar tariff ever quoted in the state of Tamil Nadu.
“The tariffs quoted ranged between a high of Rs.4 (~$0.06184)/unit and a low of Rs.3.47 (~$0.05364)/unit. Sai Jyothi Infrastructure Ventures Private Limited quoted Rs.3.60 (~$0.05565)/unit to develop 54 MW;Solitaire BTN Solar Private Limited quoted Rs.3.69 (~$0.05705)/unit to develop 150 MW; and Narbheram Vishram and NVR Energy Private Limited quoted Rs.3.85 (~$0.05952)/unit to develop 100 MW each,” stated a TANGEDCO official.
The TANGEDCO official further stated, “Rays Power Infra quoted Rs.3.85 (~$0.05952)/unit to develop 200 MW; Dynamite Solar Private Limited quoted Rs.3.87 (~$0.05983)/unit for 5 MW; ReNew Solar Energy Rajasthan Limited quoted Rs.3.89 (~$0.06014)/unit to develop 100 MW; and Clean Solar Power Ludhiana Private Limited quoted Rs.3.90 (~$0.06029)/unit for 104 MW.”
The TANGEDCO official added that a lot of small players participated in the tender. Sri Green and Clean Power quoted Rs.3.90 (~$0.06029)/unit for 6 MW; Sunlight quoted Rs.3.90 (~$0.06029)/unit for 1 MW; Talettutayi Solar quoted Rs.3.90 (~$0.06029)/unit for 50 MW; and Dev International quoted Rs.3.95 (~0.06107)/unit to develop 1 MW.
<a href="https://mercomindia.com/wp-content/uploads/2017/07/TANGEDCO.jpg"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-6362" src="https://mercomindia.com/wp-content/uploads/2017/07/TANGEDCO.jpg" alt="" width="548" height="629" srcset="https://cms.mercomindia.com/wp-content/uploads/2017/07/TANGEDCO.jpg 548w, https://cms.mercomindia.com/wp-content/uploads/2017/07/TANGEDCO-261x300.jpg 261w" sizes="auto, (max-width: 548px) 100vw, 548px" /></a>
Three developers quoted a tariff of Rs.3.96 (~$0.06122)/unit to develop 10 MW each and Shapoorji Pallonji also quoted Rs.3.96 (~$0.06122)/unit to develop 50 MW. NLC India, which had bid for the entire capacity tendered, quoted Rs.3.97 (~$0.06137)/unit.
The TANGEDCO official said, “We are happy with the tariffs quoted, we knew due to GST rate implementation we would not get a Bhadla tariff rate of Rs.2.44 (~$0.03772)/unit. Even Rs.3.47 (~$0.05364)/unit is revolutionary for Tamil Nadu.”
VSR Solar Power and GRT Jewellers India were other bidders who bid below Rs.4 (~$0.06184)/unit; they bid Rs.3.98 (~$0.06153)/unit and Rs.3.99 (~$0.06168)/unit, respectively.
Mercom <a href="https://mercomindia.com/breaking-tangedco-receives-technical-bids-aggregating-3700-mw-response-1500-mw-solar-tender/" target="_blank" rel="noopener noreferrer">previously reported</a> that TANGEDCO received technical bids aggregating 3,700 MW in response to the 1,500 MW solar tender issued in May 2017.

Breaking News: New Tariff Low in TANGEDCO; Rs.3.47 (~$0.05364) per Unit Quoted in 1,500 MW Solar Tender

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