In September 2021, Clean Wind Power (Bhavnagar) Private Limited (CWPPL) filed a petition with the Maharashtra Electricity Regulatory Commission (MERC), seeking a declaration that the Power Purchase Agreement (PPA) it signed with Maharashtra State Electricity Distribution Company Limited (MSEDCL) in 2018 is now void due to prolonged Force Majeure events. CWPPL argued that various unavoidable and prolonged issues, including the COVID-19 pandemic, regulatory delays, and lack of grid connectivity, had made it impossible to complete the project within the agreed timeframes.
The core issues started when CWPPL entered the PPA in 2018, planning to develop a 75.6 MW wind power project in Maharashtra. They secured a Performance Bank Guarantee (PBG) as part of the agreement but soon faced delays in achieving financial closure and grid connectivity. Despite repeated requests and legal processes, MSEDCL and the Maharashtra State Transmission Company Limited (MSETCL) failed to provide necessary approvals and full grid connectivity, significantly impacting CWPPL’s ability to progress.
As the project timeline continued to be disrupted, the COVID-19 pandemic caused further delays. India’s Ministry of New and Renewable Energy acknowledged these disruptions as Force Majeure events, which should permit time extensions for renewable energy projects. However, CWPPL claims these extensions were insufficient due to persistent delays in grid connectivity and the unavailability of project components due to global supply chain disruptions.
By 2020, CWPPL sought relief from MERC, requesting extensions to meet financial and operational targets. MERC granted a preliminary five-month extension, but the pandemic and lack of connectivity prevented CWPPL from making significant progress. Despite efforts to adjust project timelines, MSEDCL indicated plans to invoke the PBG due to delays, prompting CWPPL to seek interim relief to avoid further financial penalties.
In response, MSEDCL argued that CWPPL was obligated to meet all PPA terms, including obtaining statutory approvals and securing grid connectivity independently. MSEDCL maintained that financial viability issues or delays do not justify contract termination, citing prior court decisions that restrict the cancellation of contracts due to changed circumstances.
In 2024, MSETCL acknowledged administrative delays and connectivity constraints at the Pishor substation, suggesting possible upgrades to facilitate grid access. Yet, CWPPL argued that project timelines and economic conditions had significantly shifted since 2018, rendering the project financially unviable at the initially agreed tariff rates. CWPPL proposed terminating the PPA without penalties or liabilities to either party, with a return of its PBG.
In August 2024, multiple rounds of negotiation between CWPPL, MSEDCL, and MSETCL failed to yield a resolution. CWPPL reiterated that Force Majeure events beyond its control had fundamentally altered the contract’s terms, making project completion impossible within the original framework. MSEDCL disagreed, asserting that the PPA remained enforceable and that CWPPL’s financial challenges did not qualify as valid grounds for contract frustration.
The final hearing concluded with MERC reserving its decision. This case highlights the complexities of renewable energy contracts impacted by external factors and the legal interpretations surrounding Force Majeure events. The outcome may set a precedent for how regulatory bodies and courts handle disputes arising from unforeseen events, balancing contractual obligations with the realities of the renewable energy sector.
