The firm had won the project through competitive bidding in 2015 at a tariff of Rs 5.45 per unit. MPPGCL had issued a termination notice in August 2017.
New Delhi: The latest judgment by Supreme Court that set aside the cancellation of a Power Purchase Agreement signed by Madhya Pradesh government with Renewable energy producer ReNew Power is a shot in the arm for companies, industry body National Solar Energy Federation of India (NSEFI) has said.
The court had also slapped a penalty of Rs 119 million on the company for delaying the commissioning of a 51-Mw solar project in the state by over 210 days. The firm had won the project through competitive bidding in 2015 at a tariff of Rs 5.45 per unit. Madhya Pradesh Power Generation Corporation (MPPGCL) had issued a termination notice in August 2017.
ReNew challenged the decision in the High Court which disallowed the termination. The state government had later moved the apex court. “The Supreme Court has passed a landmark judgment wherein it has upheld the order of the Madhya Pradesh High Court in favor of ReNew Power, which labeled the termination of the contract by MPPGCL as unlawful and arbitrary,” Pranav Mehta, Founder and Chairman of NSEFI said in a statement.
He added that the judgment has come as a shot in the arm for the renewable sector as it is an investment-intensive sector and the Independent Power Producers (IPPs) put in substantial capital investment upfront – to the tune of $1 million per Megawatt of installed capacity.
“In this backdrop, it is imperative that the sanctity of the PPAs signed with various IPPs is maintained. Otherwise, it will dampen the image of India as a preferred investment destination for renewables,” Mehta said.
The renewable energy sector requires Rs 6.6 lakh crore investment over the next five years if India has to achieve its target of 175 Gigawatt (Gw) of renewables by 2022.