In a landmark order on risk allocation issued June 19, 2026, the Central Electricity Regulatory Commission (CERC) rejected a petition filed by Betam Wind Energy Private Limited (BWEPL) seeking to be discharged from its contractual obligations for a 200 MW wind project. The ruling concludes a long-standing dispute that intensified when BWEPL, an Engie Group company, refused to execute the Power Purchase Agreement (PPA) in November 2021. Consequently, the Commission upheld the Solar Energy Corporation of India’s (SECI) right to invoke and encash the developer’s ₹12 Crore (₹120 million) Earnest Money Deposit (EMD).
Project Background and Mapping Specifics
The 200 MW project was awarded under SECI’s 1,200 MW ISTS-connected Tranche-VII wind tender, originally floated in February 2019. BWEPL secured the capacity with a competitive tariff of ₹2.79 per kWh, receiving its Letter of Award (LoA) on June 19, 2019.
The project was part of a larger 480 MW aggregate capacity mapped to supply power to the Uttar Pradesh Power Corporation Limited (UPPCL) via a Power Sale Agreement (PSA) executed on October 1, 2019. This aggregate pool included other developers:
- Ostro Energy: 50 MW (₹2.81/kWh)
- Spring Vanyu: 100 MW (₹2.82/kWh)
- Adani Renewable: 130 MW (₹2.83/kWh)
Regulatory filings indicate that BWEPL’s attempt to unilaterally discharge its obligations significantly impacted the weighted average pooled tariff for Uttar Pradesh, which was originally calculated at ₹2.8091 per unit.
At a Glance: Case Summary
- Tender: SECI Tranche-VII (ISTS-Connected).
- Tariff: ₹2.79/kWh.
- EMD at Stake: ₹12 Crore.
- Offtaker: UPPCL (Uttar Pradesh).
- Legal Pivot: Indian Contract Act, Section 56 & Section 32.
- Key Precedent: Energy Watchdog vs. CERC (Supreme Court).
Grounds for Force Majeure Claims
According to the developer’s submission, four primary hurdles constituted Force Majeure, rendering the project unviable:
- Gujarat Land Policy: Significant delays and acquisition challenges due to shifting land procurement policies within the state of Gujarat.
- Defence Clearances: Uncertainty and prolonged timelines in obtaining No Objection Certificates (NOCs) from the Ministry of Defence (MoD) for alternative project sites.
- OEM Instability: BWEPL specifically pointed to the financial and operational instability of its original equipment manufacturer (OEM), Suzlon Energy, as a primary execution hurdle.
- COVID-19 and Regulatory Lag: Disruptions from the pandemic coupled with delays in the adoption of tariffs and formal PSA approval by state regulators.
CERC Analysis: Commercial Hardship vs. Impossibility
The Commission’s reasoning focused on whether these hurdles met the legal threshold for “frustration of contract” under Section 56 of the Indian Contract Act, 1872.
Land and Statutory Clearance Risks The Commission noted that under the Request for Selection (RfS), land procurement and obtaining all statutory clearances, including MoD NOCs, are fundamental risks allocated solely to the developer. The order observed that BWEPL participated in the bidding after conducting due diligence and must remain bound by the risk profile it accepted at the time of the bid.
COVID-19 Impact While acknowledging the global pandemic, the Commission found that these disruptions did not render project performance “impossible.” The order highlighted that SECI had already provided timeline extensions and revised commissioning schedules, which the developer failed to utilize.
The Threshold of Section 56 The CERC emphasized that contractual obligations cannot be vacated due to “commercial hardship.” Referencing the landmark Supreme Court decision in Energy Watchdog vs. CERC, the Commission ruled that a contract is not frustrated merely because it becomes more expensive or onerous to perform. The risks cited by BWEPL were deemed “contingent events” under Section 32 of the Indian Contract Act, which were already addressed by the risk-allocation framework of the contract.
Final Outcome and Financial Consequences
The Commission dismissed BWEPL’s petition for discharge, ruling that the developer’s refusal to sign the PPA constituted a default. While the developer had originally furnished a Performance Bank Guarantee (PBG) of ₹40 Crore and sought the refund of ₹47.2 Lakh in delay charges, the Commission specifically upheld SECI’s right to recover the ₹12 Crore EMD as a penalty for the failure to execute the PPA.
This ruling reinforces a strict regulatory stance on project development risks, signaling to the renewable energy sector that land acquisition and contractor-related failures remain firmly with the bidder unless they meet the narrow, extreme criteria of physical or legal impossibility.
Leave a Comment