Sprng Energy Finally Gets Exit From 100 MW Wind Project At CERC

Sprng Wind Energy Private Limited, has finally received confirmation for termination of the power purchase agreement (PPA) signed with the Solar Energy Corporation of India (SECI). The project in question was a 100 mega-watt (MW) wind project planned in Dhar, Madhya Pradesh. While delays in the signing of the PPA, and subsequently, the covid pandemic played a role, finally, it was the inability of SECI to sign a PSA that came to the firm’s rescue, and allowed an honorable exit without costs from the project.

The company had been issued the letter of award for the project in June 2019 by SECI after it became one of the lowest bidders in the auction by quoting a tariff of Rs 2.82/unit.

SECI had entered into a PSA for Sprng’s 100 MW capacity with Kerala in September 2019.

However, the state electricity regulator of Kerala (KSERC)  has not approved the procurement of this power. This failure to obtain the Kerala regulator’s consent for the PSA by KSEB, the buying entity, was finally pinned as the key reason for cancellation.

SECI had said in February 2020 the PPAs with the successful bidders of the related auction were yet to be executed. Making it clear that it had no objection to the plea of Sprng energy, this effectively ensures that the Bank Guarantee of close to Rs 19 crores of Sprng Energy can now be returned to it without any claims or penalties from SECI.

The case also puts the spotlight on more such tenders where buyers, or PSAs have still not been found, risking the project viability itself as the delay has led to significant cost escalations. The situation would apply to both solar, as well as the wind tenders pipeline, especially for PPAs signed in 2019 in our view.