CERC provides compensation to solar developers for GST law change

The Central Electricity Regulatory Commission (CERC) announced that developers are entitled to reimbursement for extra expenses incurred for 100 MW solar power projects in Uttar Pradesh and Karnataka following the implementation of the Goods and Services Tax (GST). The compensation would be considered a ‘Change in Law’ event and would be relevant even if GST was enacted after the project’s commercial operation date (CoD). The Commission also permitted developers to be compensated for increased expenditure on operation and maintenance activities, even if these services were outsourced.

It additionally requested two solar developers, as well as the Solar Energy Corporation of India (SECI) and NTPC, to reconcile the extent of incremental impact by demonstrating a one-to-one correlation between projects and invoices raised to support it. SECI will receive payment from the  distribution companies (discoms), which will then be passed to the developers. However, SECI’s payment to the developers would not be contingent on the discom’s payment to SECI.

Vector Green Prayagraj Solar and Yarrow Infrastructure filed applications with CERC, requesting that the imposition of safeguard duty be declared a ‘Change in Law’ event under the terms of the power purchase agreement.