The Supreme Court has asked Gurugram-based ReNew Power to pay a penalty of ₹11.9 crore to Madhya Pradesh for the delay in setting up a 51 MW solar project.
But, in a positive for the company, the apex court has also set aside the termination of the power purchase agreement signed between the Goldman Sachs-backed ReNew Power and the Madhya Pradesh’s utility, MPPMCL.
It is learnt that the delay in the setting up of the project was due to land acquisition issues. As the company failed to acquire land, it requested the State government to allocate land, and was given 97 acres, but the company could still not put up its project there because of encroachment issues.Subsequently, the company bought lands elsewhere but in the process the project got delayed.
However by that time the utility terminated the contract and invoked the bank guarantee for ₹15 crore. The company moved the High Court, which said the termination of the PPA was invalid, but the bank guarantee could be invoked.
Today, the Supreme Court said pretty much the same. The company has to forgo bank guarantee of ₹11.9 crore, but the PPA would continue.
National Solar Energy Federation of India, described the apex court’s order as “landmark judgement” and called it “a shot in the arm for the renewable energy sector as the sanctity of PPAs signed with independent power producers was maintained by the Honorable court.