Avaada Gets Decision From MERC for 250 MW Solar Project with MSEDCL

Mar 3, 2021 07:54 AM ET
  • MERC had guided both events i.e. Avaada and MSEDCL to finish the formalities under the RfS as well as execute the PPA by March 2, 2021.

Avaada Energy (AEPL) had actually filed a case in January 2021 versus Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) with the Maharashtra Electricity Regulatory Commission (MERC) seeking issuance of suitable order( s)/ instructions( s) to MSEDCL to implement the Power Acquisition Agreement (PPA) with the petitioner pursuant to the fostering of tariff order by the MERC in Might 2020 as well as the subsequent Letter of Honor (LoA) that was released in June 2020.

Even more, AEPL likewise desired orders/directions restraining MSEDCL from taking any forceful action like forfeiting the Earnest Bank Deposit (EMD) or encashment of Bank Guarantee in the direction of EMD.

In its order, the MERC has partially enabled the pleas made by Avaada, routing both parties to events to complete the rules under the RfS and perform the PPA by March 2, 2021, for which the tariff has actually been approved by the payment as well as the LOA was issued by MSEDCL to Avaada. Which MSEDCL was to not take any kind of coercive activity consisting of encashment of Bank Warranty in the direction of EMD for 2 weeks from the date of this order i.e March 2, 2021.


The primary petition of Avaada was to direct the participant (MSEDCL) to execute Power Acquisition Contract( s) for the supply of 250 MW with the petitioner's SPV particularly, Avaada Green Sustainable Energy and also allow in favour of the Petitioner or its SPV, any kind of substantial alleviation( s), occurring out of the hold-up in execution of the stated Power Acquisition Agreement( s).

In support of which the developer sent the following:

  • MSEDCL provided Ask for Selection (RfS), on December 27, 2019, for purchase of power on long-term basis through affordable bidding process complied with by reverse e-auction from 500 MW intra state grid-connected solar PV power projects. Out of the 500 MW capacity tendered, the 350 MW capability was subscribed as well as allotted to Avaada Energy (250 MW) and Tata Power Renewable Energy (100 MW) at the discovered tariff of Rs 2.90/ kWh.
  • It claims that according to the RFS arrangements, it had actually sent bank assurance dated March 7, 2020, amounting Rs 10 crore issued by State Bank India as EMD versus above quote.
  • Succeeding to which, MSEDCL had actually come close to MERC for approval of the discovered tariff. The Payment vide order dated Might 15, 2020, had taken on the tariff at the rate of Rs 2.90 each. Which saw MSECL problem LOA dated June 17, 2020, for purchase of power from 250 MW (150 +100 MW) Solar PV projects of Avaada.
  • AEPL accepted the LOA, notified that the PPA will be carried out by its 100% SPV Avaada MH. In July, the firm requested time approximately 31 October 2020 to send Efficiency Bank Assurance (PBG) for the signing of PPA, mentioning COVID effects. The claimed request was provided by MSECL.
  • In the meantime, AEPL vide their letter dated 15 July 2020 submitted the files for execution of PPA in the name of their SPV company, Avaada MH.
  • On November 18, 2020, after "creating chaos"-- based on MERC-- by trying to include 2 SPVs for signing the PPA and then reversing its choice and selecting Avaada Green instead of Avaada MH, the company sent the PBG in the name of Avaada Environment-friendly to MSEDCL for Rs 35 Crore.
  • Mentioning further monetary difficulties as well as operational troubles because of the pandemic, AEPL had actually requested for extension of time for the signing of PPA till December 31, 2020, and also in terms of the PBG dated November 9, 2020, having been sent, requested the Respondents to release EMD BG of Rs 10 crore.

Right Here, MSEDCL (December 30, 2020) alleged that Avaada had actually failed to send the PBG as well as EMD will certainly be forfeited.

  • In action, AEPL clarified its placement including asking for MSEDCL not to encash the EMD Bank Assurance and also requested for more extension of time approximately January 31, 2021, for the finalizing of PPA with the 'Reliable Day' of PPA remaining July 17, 2020.
  • On January 4, 2021, once more stabbed in the back its choice as well as stated that if MSEDCL has any kind of appointment against the signing of PPA in the SPV Company i.e., Avaada Eco-friendly, AEPL is willing to sign the PPA in its SPV Company i.e., Avaada MH.

Surprisingly sufficient, while all this has been brewing between Avaada and MSEDCL. Tata Power Renewable Energy, the various other victor, has currently implemented its PPA.

After learning through both parties, the compensation observed the following:

  1. The granted ability and also the tariff gotten are fair as well as should be valued.
  2. It is likewise essential to keep in mind that originally AEPL has educated MSEDCL that PPA will be authorized by Avaada MH, however consequently requested MSEDCL to allow signing of two separate PPAs with Avaada Environment-friendly and Avaada MH, both of which are 100% subsidiary of AEPL, which was denied by MSEDCL in terms of arrangements of RfS (throughout the hearing, AEPL also concurred that such request of their own was not purely according to RfS). After that, AEPL has sent papers and also PBG for Avaada Eco-friendly for signing of PPA. MSEDCL has actually not accepted such request as Avaada MH is the entity that was communicated by AEPL for signing of PPA. Afterwards, AEPL has informed MSEDCL that it is ready for finalizing of PPA in the name of the any kind of entity i.e. Avaada Green or Avaada MH.
  3. With this history, the Commission notes that MSEDCL had recommended that as signing of PPA (which originally must have signed prior to July 17, 2020) has actually been postponed and also as AEPL is still asking for added time for signing of PPA, LOA released to AEPL requires to be cancelled after invoking Bank Warranty towards EMD. In this regard, the Compensation noted that although RfS offers signing of PPA within 1 month from day of issuance of LoA, both events have consented to prolong such date upto October 31, 2020, because the COVID-19 pandemic. While extending such day, MSEDCL has actually truly secured its rate of interest by keeping turning point days i.e. Monetary Closure and Set up COD with reference to July 17, 2020, as well as not to date of finalizing of PPA. Hence, in the point of view of the Commission, MSEDCL would certainly not have any kind of adverse impact because of such delayed finalizing of PPA.
  4. The payment also quickly declined the appeals made by MSEDCL that solar tariffs considering that have actually dropped to record low quantities, citing that each tender is different and need to be dealt with therefore. Specifically after the payment itself had accepted the tariff.
  5. Highlighting the mistake of Avaada, the compensation ruled that the firm-- now a knowledgeable entity of the sector-- must not have attempted to include two SPVs in the PPA procedure. And also highly suggested the company from doing so in the future.

Ultimately, the commission got both celebrations to finish the procedures under the RfS including submission of PBG from the proper entity as well as sign PPA of 250 MW at a tariff rate adopted by the Compensation in Order dated 15 May 2020 within 2 weeks i.e. by March 2, 2021.

In these 2 weeks, AEPL will comply with all its commitments within one week of this order and MSEDCL shall afterwards in one-week scrutinise and also sign the PPA based on the arrangements of the RfS. Throughout these two weeks, MSEDCL shall not take any kind of forceful activity including encashment of Bank Warranty towards EMD.

We connected to Avaada to examine if a negotiation has actually undoubtedly been reached as per MERC orders with MSEDCL, yet the agent did not verify the news till the time of declaring.