Solar Power Projects Delayed by Coronavirus in China may Get Relief

In a big relief to renewable energy projects, the Ministry of New and Renewable Energy (MNRE) will give extra time for the commissioning of power projects that face delays due to squeezing of supply lines from China which is facing deadly spread of coronavirus.

On the lines of clarification given by Ministry of Finance (Department of Expenditure Procurement Policy Division) that coronavirus will be covered in the force majeure clause (FMC), the MNRE will soon issue a separate notification allowing developers facing delays extra time to commission their project without inviting any penalties.

A force majeure clause holds that if there are extraordinary events like those beyond human control such as wars, riots, crimes, or natural calamities, then this clause can free both the parties from contractual liability from fulfilling their obligations under the contract.

Renewable energy projects, particularly solar power projects, has been badly impacted from fulfilling their obligations under the contract.

Renewable energy projects, particularly solar power projects, has been badly impacted due to spread of coronavirus in China as it has completely stopped critical supply of modules. Nearly, 80 per cent of solar modules is sourced from China.

This has put developers at the risk of paying penalty to state discoms for any delay in commissioning of projects as per the terms of power purchase agreement (PPA).

Rating agency CRISIL has estimated that nearly 3000 MW of solar projects, worth Rs 16,000 crore, could be at risk of penalties for missing their respective scheduled commercial operation date (SCOD) if the impact of Coronavirus on trade with China prolongs.