(1) From Megawatts to Momentum: India’s Rise in Renewable Energy Generation

1.1 India’s renewable energy landscape in 2025 continued its robust growth trajectory, reinforced by regulatory clarity and judicial interventions aimed at balancing environmental protection with energy transition imperatives. The country’s installed renewable capacity surpassed 262.64 GW, with solar energy accounting for nearly half of this share. Renewables now constitute about 51.5% of India’s total installed capacity of 64 GW, placing the nation firmly on course to achieve its 500 GW non-fossil fuel target well before 2030. The year also witnessed an acceleration of green hydrogen and energy storage projects under the National Green Hydrogen Mission, signaling a decisive shift toward integrated clean energy systems.

1.2 On the regulatory front, 2025 proved pivotal with the Ministry of Power (“MoP”) and the Central Electricity Regulatory Commission (“CERC”) proposing amendments to the CERC (Grant of Connectivity and General Network Access to the inter-State transmission system) Regulations, 2022 and the Electricity Act, 2003 (“Electricity Act”), aiming to streamline transmission access, enhance market efficiency, and promote grid integration for renewable power. Foreign investment trends remained strong, particularly in hybrid, offshore wind, and battery energy storage projects, driven by favorable policy interventions and declining technology costs.

1.3 While progress has been remarkable, policy execution and fiscal viability remain critical challenges, particularly concerning transmission connectivity, payment security mechanisms, and land-use conflicts in ecologically sensitive zones. The Supreme Court’s landmark judgment in K. Ranjitsinh & Ors. v. Union of India (Writ Petition (C) No. 838 of 2019) concerning the protection of the Great Indian Bustard reflected the ongoing judicial balancing between ecological preservation and renewable energy expansion. Against this backdrop, India’s renewable energy sector in 2025 emerged more mature, regulated, and globally aligned, marking another defining year in its transition toward sustainable growth.

2 Regulatory Developments

2.1 Power Play: Draft Bill aims to End DISCOM debt, eliminate cross-subsidies and spark Market driven growth

The Draft Electricity (Amendment) Bill, 2025: The MoP released the Draft Electricity (Amendment) Bill, 2025 (“Draft Amendment”) to amend the Electricity Act on October 9, 2025, for public consultation.[1] The consultation process concluded on November 30, 2025, and notification of the Draft Amendment is still awaited. The Draft Amendment, inter alia, introduces the following:

(i) Mandatory Cost-Reflective Tariffs: To enhance the financial viability of the distribution licensees (“DISCOMs”) while protecting consumer interest, Section 61(g) of the Electricity Act is proposed to be amended to mandate that tariffs determined by the Central or State electricity regulatory commissions (“ERCs”) must reflect the cost of supply of electricity. The Draft Amendment codifies the principle laid down by the Supreme Court of India (“Supreme Court”) in BSES Rajdhani Power Ltd. & Anr. vs. Union of India & Ors. (Writ Petition (C) 104 of 2014)[2] which held that electricity tariff must be cost-reflective.

(ii) Timely Tariff Revisions: Currently Section 64 (1) of the Electricity Act does not authorize the Central or State ERCs to initiate tariff determination on their own before the financial year begins. Therefore, to curb delays, the Draft Amendment empowers Central or State ERCs to determine tariffs suo motu if a licensee or generating company fails to file a timely petition under Section 62 of the Electricity Act.

(iii) Elimination of Cross-Subsidies: In order to foster industrial expansion, and reduce transportation and logistics costs, the Draft Amendment has introduced a new proviso to Section 61(g) which mandates full elimination of cross-subsidies for Manufacturing Enterprises, Railways, and Metro Railways within 5 years from the commencement of the Electricity Act.

(iv) Market-Based Mechanisms for Capacity Addition: Section 66 is proposed to be amended to empower the Central or State ERCs to introduce and regulate market platforms, intermediaries, market products including non-transferable specific delivery contracts for difference. This will enable the development of renewable energy capacity through market-based mechanisms, reducing the sector’s reliance on long-term power purchase agreements (“PPAs”) with financially constrained DISCOMs.

(v) Renewable Purchase Obligations (“RPOs”): Presently, renewable energy consumption obligations are mandated under the Energy Conservation Act, 2001. Parallelly, the Electricity Act also empowers State ERCs to specify RPOs. Therefore, to ensure consistency, the Draft Amendment proposes to mandate that the percentage of power to be purchased from non-fossil sources, as specified by State ERCs cannot be less than such percentage as may be prescribed by the Central Government. Further, the Draft Amendment introduces a specific monetary penalty, ranging from 35 to 45 paise per kilowatt-hour, for any shortfall in meeting the non-fossil energy consumption obligation.

(vi) Recognition for Energy Storage: The Draft Amendment formally defines Energy Storage Systems (“ESS”) and integrates them into the definition of the “power system”, thereby providing regulatory certainty.

(viii) Section 164 (Right of Way): Section 164 is proposed to be substituted entirely. The new section incorporates the powers previously derived from the Indian Telegraph Act, 1885, directly into the Electricity Act. This ensures a seamless transfer of legal authority and continuity of the existing framework for the installation and maintenance of electric lines, following the repeal of the Indian Telegraph Act, 1885.

(viii) Cybersecurity Framework: To address the risks associated with increasing digitalization through deployment of extensive information and communication technology (ICT) infrastructure such as smart meters, the Draft Amendment empowers the Central Electricity Authority (“CEA”) to frame regulations to ensure the cybersecurity of the integrated power system.

2.3 Unlocking the Grid: New rules grant Energy Storage Systems full legal status, paving way for new business models

Electricity (Amendment) Rules, 2025 on Energy Storage Systems: The MoP on September 19, 2025, notified the Electricity (Amendment) Rules, 2025 (“2025 Amendment Rules”) amending Rule 18 of the Electricity Rules, 2005 (“Electricity Rules”) which governs ESS[3]. The 2025 Amendment Rules provide crucial legal and operational clarity by permitting ESS to be utilized either as an independent system or as an integrated part of generation, transmission, or distribution. The 2025 Amendment Rules expressly allows generating companies, transmission or distribution licensees, consumers, system operator and a new category of “independent energy storage service providers”, to develop, own, lease or operate ESS.

Furthermore, an ESS owned and operated by and co-located with a generating station, a transmission licensee, a distribution licensee or a consumer, shall have the same legal status as that of the owner. However, if such an ESS is not co-located, it will be treated as a separate element for scheduling and dispatch purposes. The 2025 Amendment Rules also grant commercial flexibility by allowing owners to sell or lease storage capacity to any consumer, a load despatch centre, a utility which is engaged in generation, transmission or distribution or to or any other person or entity, thereby enabling new business models for grid support and energy management.

2.4 Trash to Treasure: Government revamps Waste-to-Energy scheme with faster funding and flexible rules

Revised Waste-to-Energy Guidelines: The Ministry of New and Renewable Energy (“MNRE”) has revised the guidelines for the Waste-to-Energy (“WTE”) Schemes that were issued July 30, 2018, February 28, 2020, and November 2, 2022 (“WTE Scheme”), on June 27, 2025 (“Revised WTE Scheme”)[4]. The WTE Scheme offers Central Financial Assistance (“CFA”) to project developers and service charges to inspection agencies for the successful commissioning of WTE plants for generation of Biogas, Bio-CNG/ enriched Biogas/ Compressed Biogas, Power/ generation of producer or syngas from urban, industrial and agricultural waste. The applicability of the Revised WTE Scheme will be extended to all the projects sanctioned under the WTE Scheme. The key changes under the Revised WTE Scheme are:

(i) A revised performance parameter has been introduced under which successful commissioning of WTE plants means continuous operation for at least 24 hours at an average of 80% of the rated capacity of the plant for at least 3 consecutive months.

(ii) A new, two-phase CFA disbursement mechanism has been introduced to improve project cash flow. Developers can now receive 50% of the total eligible CFA upfront after obtaining the consent to operate (“CTO”) certificate from the State Pollution Control Board, against the submission of a bank guarantee for the equivalent amount. The balance CFA will be released after the project achieves 80% of the rated capacity or maximum CFA eligible capacity, whichever is less for 24 hours. If the developer fails to operate the plant at minimum 80% of the rated capacity or maximum CFA eligible capacity whichever is less during the performance inspection, then disbursement will be done on a pro rata basis.

(iii) Joint inspection team will submit inspection reports: (a) prior to the release of 50% of the CFA post receipt of the CTO certificate; and (b) prior to the release of the remaining CFA.

(iv) The compliance timeline and process for performance inspection have been made more flexible. The performance inspection must now be completed within 18 months from the date of commissioning or 18 months from the date of ‘in-principle’ approval, whichever is later. Developers are now given the flexibility to choose their inspection agency from a list of approved bodies.

(v) The revised guidelines now explicitly state that the power to relax any of the provisions of the WTE Scheme vests with the Union Minister of New & Renewable Energy.

2.5 Nuclear Renaissance: SHANTI Act opens doors for private-players, realigns India with global liability norms

The Evolution of Nuclear Energy in India through the SHANTI Act: India’s journey with nuclear energy has been a carefully calibrated progression, evolving from a position of strict government control to a modernised framework that embraces private sector participation. This evolution reflects the nation’s growing technological maturity and its ambitious clean energy goals, culminating in the landmark Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025 (“SHANTI Act”)[5]. The SHANTI Act has repealed and replaced the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010 (“Existing Laws”), and has introduced a consolidated legal framework governing the promotion, development and regulation of nuclear energy. The SHANTI Act seeks to remove barriers which have held back growth in India’s nuclear power generation.

(i) The Foundation (State-Led Development): The legislative foundation for India’s nuclear programme was established with the Atomic Energy Act, 1962, which replaced the earlier Atomic Energy Act, 1948. The Atomic Energy Act, 1962 granted the central government exclusive control over the development, regulation, and use of atomic energy, ensuring its application for peaceful purposes while safeguarding national interests. For decades, this state monopoly guided the country’s nuclear research and power generation efforts. Over time, amendments in 1986, 1987, and 2015 gradually relaxed these controls, allowing government-owned companies and their joint ventures to participate in nuclear power generation. This was a significant step in expanding India’s nuclear capacity while maintaining strategic government oversight.

(ii) Establishing a Liability Framework: A crucial development came with the Civil Liability for Nuclear Damage Act, 2010. Enacted in the shadow of the Bhopal gas tragedy, this law introduced a no-fault liability regime to ensure prompt compensation for victims of a nuclear incident. While it aimed to build public trust, a key provision allowing operators to seek recourse against suppliers for defective equipment became a major obstacle for foreign investment, as it deviated from international norms.

(iii) Key features of the new legislative framework include the following:

(a) Private Sector Participation: For the first time, private companies are encouraged to engage in nuclear plant operations, power generation, and equipment manufacturing, subject to obtaining a licence and safety authorisation.

(b) Statutory Regulator: It grants statutory recognition to the Atomic Energy Regulatory Board (AERB), strengthening its independence and authority as the sector’s primary regulator.

(c) Reformed Liability: The SHANTI Act aligns India’s liability regime with international standards. An operator’s right of recourse against a supplier is now limited to cases where it is expressly provided for in a contract or if an incident results from intentional damage.

(d) Continued State Oversight: Despite opening the sector, the government retains exclusive control over sensitive activities, including the nuclear fuel cycle, management of spent fuel, and waste management, ensuring that national security remains paramount.

In pursuit of India’s national objective to establish 100 gigawatts of nuclear power capacity by 2047, the SHANTI Act creates a regulatory framework for private sector involvement. The legislation permits eligible private entities and incorporated joint ventures to apply for licences to undertake the construction, ownership, operation, and decommissioning of nuclear power plants. Concurrently, it preserves sovereign authority over strategic and safety-sensitive domains, which include uranium enrichment, spent fuel management, heavy water production, and the control of radioactive substances and equipment.

2.6 Gridlock to Greenlight: CERC’s GNA overhaul introduces time-based access and cracks down on speculative projects

General Network Access – Third Amendment: On August 31, 2025, the CERC issued the third amendment to the CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022 (“Third Amendment”) which introduces a suite of sophisticated changes to the existing framework i.e., the CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022 (“GNA Regulations”).[6] These amendments are designed to address emerging challenges in the power sector, particularly the rapid growth of renewable energy, by promoting efficient grid utilization, ensuring developer accountability, and providing necessary project development flexibility. The key amendments introduced through the Third Amendment inter alia include the following:

(i) Maximizing Transmission Infrastructure (Solar and Non-Solar Hour Access): This change is aimed directly at optimizing the use of capital-intensive transmission assets. The Third Amendment introduces a time-differentiated model for transmission access. The day is now divided into “Solar hours” and “Non-Solar hours,” with definitions and weekly declarations to be managed by the National Load Despatch Centre (“NLDC”). A renewable energy project based on a solar source is granted “Solar Hour Access” which means that its primary right to inject power is during solar hours. The transmission capacity it uses becomes available during non-solar hours. Another project, typically based on wind or an ESS, can then apply for “Non-Solar Hour Access” at the same inter-state transmission system (“ISTS”) substation, utilizing the capacity freed up by the solar project.

(ii) Strengthening Accountability and Curbing Speculation: The principal regulations i.e., the GNA Regulations were silent on the restrictions regarding the change of control of a Connectivity Grantee, creating ambiguity as to whether promoters or shareholders could transfer their control prior to project commissioning. The Third Amendment addressed this by introducing Regulation 11A(6), which establishes a lock-in period for the ownership of a renewable energy project (excluding hydro generating stations and pumped storage plants) from the date of the connectivity application until its commercial operation date (“COD”). Under this provision, the “Promoters” or shareholders of the applicant company must retain “Control” of the Connectivity Grantee during this period. Any deviation from this requirement necessitates prior approval from the nodal agency (CTU). An unauthorized change in control will result in severe penalties, including the revocation of connectivity and the encashment of all furnished bank guarantees (“BGs”), namely Conn-BG1, Conn-BG2, Conn-BG3, and any BG submitted in lieu of land. The terms “Control” and “Promoter” are defined in line with the Companies Act, 2013. For entities with Foreign Direct Investment (FDI), “Control” aligns with the definition under the Foreign Exchange Management Act, 1999, and its associated rules and regulations. Pursuant to this mandate, on December 12, 2025, the Central Transmission Utility of India Limited (“CTUIL”) issued the revised “Draft Detailed Procedure for Approval of Change in Control of Connectivity Grantee.”[7] This procedure outlines the specific grounds on which an application for a change in control can be considered, such as insolvency proceedings, governmental directives, or the exercise of step-in rights by lenders. It also details the application process, documentation requirements, and preconditions for seeking such approval.

(iii) Stricter Consequences for Withdrawal and Relinquishment: The penalties for withdrawing an application now escalate based on the stage of withdrawal:

(a)Before in-principle grant: 50% of the application fee is forfeited.

(b)After in-principle grant but before final grant: 100% of the fee and 5% of the land-route BG are forfeited. Conn-BG1 is encashed.

(c)After final grant but before signing agreement: 100% of the fee and 15% of the land-route BG are forfeited. Conn-BG1 is encashed.

(d)For speculative applicants (those using the land/BG route), a new penalty for relinquishing connectivity post-agreement is introduced: (i) within 6 months of signing, 40% of the subsisting land-route BG is encashed; and (ii) after 6 months, 75% of the subsisting land-route BG is encashed.

The Third Amendment introduce mechanisms to allow developers to adapt to changing circumstances, such as:

(i) Change of Renewable Source: A connectivity grantee can now apply to change its project’s energy source (e.g., from solar to a solar-wind hybrid) within 18 months of the in-principle grant of connectivity or 18 months prior to the firm start date of connectivity, whichever is later. The nodal agency will conduct system studies and approve or reject the change within 30 days. This is a one-time facility and is subject to the condition that change of source shall be considered for an entity with solar hour access only to the extent the non-solar hour access has not been granted to another entity(ies).

(ii) Change of Land Parcel: Developers may now change the land parcel for their project, subject to approval of the nodal agency. The developer must submit documents for the new land, and the nodal agency has a defined timeline to process the request. However, such change cannot alter the point of connectivity or the start date of connectivity, ensuring no disruption to the grid planning process. This is also a one-time facility.

(iii) Reallocation of Connectivity: If transmission capacity at a bay becomes vacant, an entity with connectivity at another substation within the same cluster can apply to be reallocated to the vacant spot. The reallocation is done based on a priority order – first, applicants transitioned from the erstwhile CERC (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations, 2009, followed by applicants under the current GNA Regulations, all based on their original application timestamp.

(iv) Connectivity for BBMB System: Following the declaration of the Bhakra Beas Management Board (BBMB) system as ISTS, a specific, simplified procedure has been created for RE generators seeking to connect to the BBMB network, with different rules for projects above and below 5 MW.

(v) Enhanced Monitoring and Reporting: The nodal agency is now required to publicly monitor and report on the progress of projects against key milestones like land acquisition and financial closure. Regional Load Despatch Centre (RLDC) and NLDC are tasked with monitoring the actual utilization of granted connectivity and general network access (“GNA”), with a mandate to report to CERC and propose actions for non-optimal utilization.

(vi) Refined GNA and Temporary GNA (T-GNA) Rules: The rules for entities connected to state transmission or distribution systems seeking GNA have been clarified, including the requirement to obtain State Transmission Utility (“STU”) consent.

(vii) Temporary GNA (T-GNA) Charges: The Third Amendment specifies that no transmission charges shall be payable for T-GNA used for the purpose of injection into the ISTS. However, new operating charges payable to the load dispatch centers are introduced for managing T-GNA transactions.

This comprehensive set of amendments seeks to strike a balance between providing flexibility to genuine developers and imposing strict discipline to prevent blocking of valuable transmission capacity, all while pioneering innovative concepts like time-differentiated access to maximize grid efficiency.

2.7 Hydrogen Highway: India refines mission, rolls out red carpet for start-ups with dedicated funding and new certification scheme

India Refines Green Hydrogen Mission: The Government of India (“GOI”), through the MNRE, is actively structuring the framework for its ambitious National Green Hydrogen Mission. The initial groundwork was laid by two key guidelines in 2024, which focused on infrastructure development and pilot projects. This framework has since evolved, culminating in revised guidelines in 2025 that strategically broaden participation, particularly for startups. A critical component of this ecosystem is the Green Hydrogen Certification Scheme of India (“GHCI”), which establishes a robust, uniform standard to certify the authenticity of green hydrogen.

(i) Initial Groundwork: The 2024 Guidelines

The early phase of the mission focused on building foundational capacity and exploring innovative technologies through two targeted schemes which are as follows:

(a) Testing and Infrastructure (July 2024): The guideline dated July 4, 2024, allocated a budget of INR 2,00,00,00,000 to address the gaps in testing facilities and infrastructure for the green hydrogen value chain. Its primary goal was to create and upgrade testing and certification infrastructure to ensure quality, safety, and performance, thereby building a robust ecosystem for the emerging sector. This scheme provides up to 100% of the capital cost for government entities and 70% for non-government entities.

(b) Initial Pilot Project Guidelines (“November 2024 Guidelines”): The guideline dated November 8, 2024, also with a budget of INR 2,00,00,00,000, focused on implementing pilot projects for innovative methods of green hydrogen production and use. The objectives included supporting technologies like floating solar-based and biomass-based hydrogen production and promoting decentralised applications in cooking, heating, and off-road vehicles. The eligible Executing Agencies (EAs) were primarily public sector undertakings, government bodies, and research institutions.

(ii) Strategic Shift in the Revised 2025 Guidelines

The most significant development is the revised scheme guideline issued on August 4, 2025 (“Revised Guidelines”), which supersedes the November 2024 Guidelines.[8] While the core objectives and the INR 2,00,00,00,000 budget remain the same, this revision introduces critical changes that refine the implementation strategy, with a clear emphasis on broadening participation and encouraging startups. The key modifications in the Revised Guidelines are detailed below:

Feature	November 2024 Guidelines	Revised Guidelines
Eligible Entities	Limited to Central Public Sector Undertakings (CPSU), State-Public Sector Undertakings (PSU), State Corporations, Non-Governmental Organizations (NGOs), and Research and Development (R&D) institutions.	Expanded to include Public and Private companies, Limited Liability Partnerships (LLPs), Corporate entities, Proprietorships, Partnerships, and startups.
Funding Structure	A single scheme with a total outlay of INR 2,00,00,00,000.	The scheme is bifurcated into two parts: (a)     Part A: INR 1,00,00,00,000 for biomass-based & other technology pilot projects (maximum INR 25,00,00,000 per project). (b)     Part B:  INR 1,00,00,00,000 specifically for startups developing innovative technologies (maximum INR 5,00,00,000 per project).
Financial Assistance Quantum	No specific percentage of financial assistance was mentioned for different types of entities.	Clear financial support is defined: (a)     Private entities: 80% of total equipment cost. (b)     Government organisations: 100% of total equipment cost.
Scheme Implementing Agency (SIA)	Could be National Institute of Solar Energy (NISE), NIBE, or Solar Energy Corporation of India (SECI).	More specific designation: (a)     Part A: SIA to be nominated by MNRE. (b)     Part B: NISE is designated as the SIA.
Approval Process	Final approval by the Advisory Group of the National Green Hydrogen Mission.	Proposals recommended by the Project Appraisal Committee (PAC) will be approved by the Advisory Group under the chairmanship of the Principal Scientific Advisor (PSA) to the GOI.

(iii) Green Hydrogen Certification Scheme of India

Launched by the MNRE on April 29, 2025, the GHCI establishes a uniform framework to certify green hydrogen and ensure it meets specific emission standards.[9] The key provisions of the GHCI are as follows:

(a) Applicability and Exemptions: Certification is mandatory for producers receiving government incentives or concessions, or those selling or using green hydrogen domestically. However, small facilities producing 10 tons or less per year and 100% export-oriented producers who do not avail any incentives are exempt from requiring a final certificate.

(b) Scope and Pathways: GHCI scope covers the production process up to on-site storage. It currently recognizes electrolysis and the conversion of biomass as eligible production pathways.

(c) Verification and Compliance:Compliance is verified through a robust Monitoring, Reporting, and Verification (MRV) framework. Producers must engage an Accredited Carbon Verification (ACV) agency to assess their greenhouse gas emissions against a prescribed materiality threshold.

(b) Certification Process: The process involves issuing both facility-level certificates (Concept and Facility Level) and production-level certificates (Provisional and Final). The mandatory Final Certificate serves as a transferable Guarantee of Origin (GO) and can be used for claiming carbon credits under relevant schemes.

(e) Non-Compliance: The scheme outlines clear penalties for non-compliance, including the withdrawal of certificates, to maintain the integrity and credibility of the certification.

2.8 Charging Ahead: Government extends transmission charge waivers to supercharge Energy Storage Projects

Waiver of Inter-State Transmission Charges: In order to promote the development and use of renewable energy, energy storage system, and green hydrogen/ammonia, the MoP has issued several orders granting waiver of inter-state transmission charges.

On June 10, 2025, the MoP partially amended its previous orders, issuing a new notification that provides waiver for ESS, namely for Hydro Pumped Storage (“Hydro PSP”) and Battery Energy Storage System (“BESS”) projects.[10] For BESS, this order clarified “co-located” to mean BESS and renewable energy projects connected at the same ISTS substation. Subsequently, the MoP on June 26, 2025, issued the fourth amendment to the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020 (“Fourth Amendment”).[11] The Fourth Amendment revised the existing exemption categories and also incorporated the changes introduced by the MoP’s June 10, 2025, order. The key exemptions are as follows:

(i) REGS based on wind or solar source or RHGS based on wind and solar source:Renewable energy generating station (“REGS”) or renewable hybrid generating station (“RHGS”) based on wind or solar source or a combination of wind and solar source are eligible for a 25 year waiver. The waiver is 100% for such projects achieving COD by June 30, 2025, and it tapers down to 0% for projects commissioned after June 30, 2028.

(ii) Energy Storage Systems (ESS): ESS will be eligible for waiver as follows:

(a) Hydro PSP:A 100% waiver is available for 25 years if the construction work is awarded on or before June 30, 2028.

(b) Co-located BESS:For BESS connected at a substation where REGS is connected and is charged from such REGS, a 100% waiver is available for 12 years for projects commissioned on or before June 30, 2028.

(c) Non-Co-located BESS:For BESS connected at a substation where (a) no REGS is connected; or (b) REGS is connected but the BESS is charged from grid or a source other than REGS; or (c) any other BESS not covered under the abovesaid exemption, the waiver is for 12 years, starting at 100% for projects with a COD on or before June 30, 2025 and tapering down to 0% for projects commissioned after June 30, 2028.

(iii) Hydro Generating Stations:These projects are eligible for an 18-year waiver. The waiver starts at 100% for projects with PPA signing and construction awarded on or before June 30, 2025, tapering to 0% for those after June 30, 2028.

(iv) Offshore Wind Projects:These are eligible for a 25-year waiver, starting at 100% for projects with COD on or before December 31, 2032, and tapering to 0% for those after December 31, 2035.

(v) Green Hydrogen/Ammonia Plants:As consumers (drawees), these plants are eligible for a 25-year waiver. The waiver is 100% for plants with COD up to December 31, 2030, tapering to 0% for those after January 1, 2034. They can avail the higher of the waiver applicable to them or the generating station they are drawing power from.

The Fourth Amendment introduces a crucial provision for preserving the 100% ISTS charge waiver for wind/solar REGS, hybrid wind-solar REGS, or BESS that were originally scheduled to achieve COD on or before June 30, 2025. This applies to projects whose scheduled COD is delayed due to Force Majeure events, non-availability of the transmission system, or other reasons not attributable to the REGS/BESS project. Such extension is limited to 6 months at a time, with a maximum of 2

extensions if the period goes beyond June 30, 2025. The authority to grant these extensions is: (i) for projects under PPAs from tariff-based competitive bidding (Section 63 of the Electricity Act), the Renewable Energy Implementing Agency, distribution licensee, authorized agency, or MNRE, will be the competent authority; and (ii) for other cases, the CERC based on recommendations from a specially appointed committee will be the competent authority.

The MoP’s abovesaid orders are a time-bound incentive designed to reduce project costs and encourage timely completion.

2.9 Battery Bonanza: India launces massive ₹54 billion funding scheme to build 30 GWh of Energy Storage Systems

India Launches Major Viability Gap Funding Scheme to Boost Battery Energy Storage Systems: The MoP on June 9, 2025 has announced a significant policy initiative to support the development of BESS across the country.[12] This is the second tranche of viability gap funding (“VGF”) scheme which is aimed at developing 30 GWh of BESS capacity, backed by the Power System Development Fund (“PSDF”). This move is a critical step towards integrating the nation’s growing renewable energy capacity and ensuring grid stability.

(i) Strategic Objectives and Rationale

The primary objective of the scheme is the development of 30 GWh of BESS capacity to facilitate the grid integration of renewable energy and ensure a reliable electricity supply for the nation. With India targeting 393 GW of renewable energy capacity by 2030, ESS are deemed essential for managing the variability of sources like solar and wind.

The scheme also recognizes the need for BESS to support thermal power stations, allowing them to operate more flexibly and efficiently leverage existing infrastructure, particularly to meet evening peak demand when solar generation is unavailable. According to the CEA, India requires 37 GWh of BESS capacity by 2027, a figure projected to rise to 236 GWh by 2031-32.

(ii) Key Features of the VGF Scheme

(a) Financial Support: The scheme provides a VGF of INR 18,00,000 per MWh, with a total budgetary allocation of INR 54,00,00,00,000, fully funded from the PSDF.

(b) Capacity Allocation: A total capacity of 30 GWh is planned, with 25 GWh allocated to 15 states and the remaining 5 GWh allocated to NTPC. The allocation aims to help states meet their specific energy storage requirements and enable NTPC to optimize its thermal generation assets.

(c) Eligible Entities: State utilities, agencies authorized by State or Central Governments, and NTPC are eligible to participate in the scheme.

(d) Project Timeline: Projects must be commissioned within 18 months from the date of signing the Battery Energy Storage Purchase Agreement (BESPA) or PPA. Eligible entities are required to submit their proposals to the NLDC within 30 days from the issuance of the scheme letter.

(iii) Implementation and Bidding Framework

The BESS projects under this scheme are to be awarded through a Tariff Based Competitive Bidding (TBCB) process, as stipulated under Section 63 of the Electricity Act. Developers will compete based on the annualized fixed cost they offer. The contracts will be structured on a Build Own Operate (BOO) or Build Own Operate Transfer (BOOT) basis, preferably for a period of 12 to 15 years.

The VGF disbursement is structured in three tranches tied to project milestones:

Milestone	Percentage of VGF Disbursed
On financial closure (subject to submission of a bank guarantee)	20%
On COD	50%
On completion of the first year from COD	30%

A key requirement is that eligible entities must obtain a bank guarantee equal to the VGF amount to be disbursed. This bank guarantee can be encashed if the developer fails to meet the scheme’s conditions.

(iv) Monitoring and Compliance

The CEA is tasked with monitoring the implementation of the scheme and the progress of awarded projects. The eligible entities are responsible for conducting the bidding process, entering into contracts, and ensuring compliance with all scheme guidelines, including the General Financial Rules, 2017. The accounts of the entities will be subject to audit by the Comptroller & Auditor General of India (C&AG).

The guidelines also include a provision allowing for amendments with the approval of the Secretary, Ministry of Power, to address any implementation challenges that may arise.

2.10 Small Scale, Big Impact: ALMM Rules relaxed to boost local brands in sub-1 MW solar projects

MNRE issues amendment to the ALMM List: The MNRE vide Office Memorandum dated August 7, 2025, issued an amendment to the guidelines for enlistment under Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Compulsory Registration) Order, 2019 (“Revised ALMM Order”)[13].

This amendment prescribes conditions for enlistment of solar PV models and manufacturers in the Approved List of Models and Manufactures (“ALMM”) which is a government approved list of solar panel models and their manufacturers and is a prerequisite for supplying to projects under Government schemes. Further, it modifies provisions under Paragraph 5.14 of guidelines for enlistment under Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Compulsory Registration) Order, 2019 (“ALMM Order”) which pertains to enlistment of co-branded products[14].

(i) Old Framework

Under the ALMM Order, Paragraph 4.3 referred to the inspection of all manufacturing sites of an applicant under the ALMM. This includes inspection of those manufacturing sites from where the applicant is sourcing their finished products unless both parties have entered into a co-branding agreement, are ALMM enlisted and are using the same manufacturing process and bill of materials. Paragraph 5.14 allowed enlistment of co-branded products only when both the Brand Owner[15] and Original Equipment Manufacturer[16] (“OEM”) are ALMM enlisted. The application must include a co-branding agreement, relevant capacity details and an application fee of INR 1,000. The validity of enlistment in the ALMM is 2 years or until expiry of the co-branding agreement or model’s ALMM enlistment, whichever is earlier. Therefore, earlier only Brand Owners and OEMs both enlisted in ALMM could apply for co-branded module enlistment. Now, two cases are eligible: (i) Case I: Both Brand Owner and OEM are ALMM-enlisted (unchanged) and (ii) Case II: Brand Owner not ALMM-enlisted, but OEM is ALMM-enlisted, subject to specific conditions apply which are set out below.

(ii) Revised Framework

The MNRE has amended the above provisions to introduce a new category for co-branded enlistment which permits cases where the Brand Owner is not ALMM enlisted but the OEM is ALMM enlisted. This case is subject to the following conditions:

(i) applicability only for Distributed Renewable Energy (DRE) projects of capacity less than 1 MW;

(ii) the Brand Owner being a registered company with no solar PV module manufacturing facilities worldwide;

(iii) the existence of a mandatory co-branding agreement with the OEM with joint and several warranties from both parties and a mandatory physical inspection of the OEM’s facility; and

(iv) the validity period for co-branded model enlistment has been extended from two years to four years or until the earlier expiry of the co-branding agreement, the OEM’s ALMM enlistment or the Brand Owner’s ALMM enlistment. Additionally, in cases where the Brand Owner is not ALMM enlisted, their name will now be separately included in the ALMM alongside the OEM.

(iii) Impact

Revised ALMM Order will now enable non-enlisted Brand Owners to sell ALMM compliant modules for small-scale Distributable Renewable Energy (DRE) projects while upholding safety standards.

(a) Broadened Supplier Base for DRE projects <1MW: Solar developers working in the sub-1MW segment can now procure modules branded by Indian companies not on the ALMM list, as long as the OEM is ALMM-enlisted and other requirements are met.

(b) Contractual & Warranty Clarity: Warranties (product, performance, etc.) must be jointly offered by both Brand Owner and OEM, which may strengthen recourse for developers in case of issues.

(c) Validity of Approved Modules Extended: With the extension of enlistment from two to four years, planning and procurement flexibility increases—modules remain eligible for longer without re-inspection.

(d) Physical Inspection and Compliance: Co-branded modules (in Case II) will have additional scrutiny. Developers should ensure module documentation and labelling meet new requirements, especially regarding manufacturer and site details.

2.11 The Virtual Revolution: CERC Greenlights Virtual PPAs, unlocking new corporate green investments

CERC framework issued Guidelines on Virtual PPAs: In a significant move to help India achieve its ambitious renewable energy targets, the CERC has issued the “Guidelines for Virtual Power Purchase Agreements (“VPPA”)” on December 24, 2025 (“VPPA Guidelines”).[17] By providing developers with a long-term, predictable source of income, VPPAs enhance the financial viability of renewable projects and shield them from the price volatility of the wholesale power market.

The VPPA Guidelines establish a regulatory framework for a new financial instrument, designed to help corporations and other large consumers meet their Renewable Consumption Obligations (“RCOs”).

The VPPA Guidelines were developed following a request from the MoP and after CERC consulted with the Securities and Exchange Board of India (“SEBI”) to clarify regulatory jurisdiction. SEBI opined that since VPPAs are bilateral, non-tradable, and non-transferable Over The Counter (“OTC”) contracts, they can be classified as non-transferable specific delivery (NTSD) contracts. This classification places them outside the purview of the Securities Contracts Regulation Act, 1956, and firmly under the regulatory authority of CERC.

Prior to the VPPA Guidelines, a clear legal basis for VPPAs was absent, which hindered their adoption. Firstly, there was uncertainty over whether VPPAs were financial instruments regulated by SEBI or electricity contracts regulated by CERC (which was settled as discussed above). Secondly, the prevailing CERC (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022 (“REC Regulations”) did not permit capacity contracted under a VPPA to be eligible for the issuance of Renewable Energy Certificates (“RECs”). Thirdly, the CERC (Power Market) Regulations, 2021 (“Power Market Regulations”) were designed for the physical delivery of electricity, and there was no functioning OTC derivatives market to support VPPA structures. The VPPA Guidelines have addressed and resolved these issues, as detailed below:

(i) How VPPAs Work Under the New Guidelines

A VPPA is a financial contract rather than a physical PPA. Such contract would be entered into between an REGS (under the CERC (Indian Electricity Grid Code) Regulations, 2023) and a “Consumer” (under the Electricity Act) or a “Designated Consumer” (an entity with RCO targets under the Energy Conservation Act, 2001). The core mechanism involves:

(a) Agreed Pricing: The parties mutually agree on a “VPPA Strike Price” for the electricity i.e, the fixed price mutually agreed between a Consumer or a Designated Consumer and an REGS.

(b) Physical Sale of Power: The REGS sells the actual electricity it generates through any mode authorised under the Electricity Act, or delivery under contracts on power exchanges under the Power Market Regulations, at the prevailing market price, known as the “Settlement Price”.

(c) Financial Settlement: The financial difference between the VPPA Strike Price and the variable Settlement Price is settled bilaterally between the REGS and the Consumer or Designated Consumer. This arrangement provides price certainty for the generator while allowing the consumer to support renewable energy without taking physical delivery of power.

(d) Transfer of RECs: The RECs generated from the power sold are transferred to the consumer. The consumer can then use these RECs to meet their RPO/RCO compliance targets.

(ii) Key Features and Conditions

The guidelines lay down several essential features for VPPAs:

(a) Contract Nature: VPPAs must be structured as bilateral OTC contracts that are both non-tradable and non-transferable (NTSD). This means the contract must remain between the original parties for its entire duration.

(b) Duration: The minimum term for a VPPA is one year.

(c) REC Treatment: RECs transferred to a consumer under a VPPA are not eligible for further trading. Once used for compliance, these certificates are considered “extinguished” by the Central Agency. However, any surplus RECs can be carried forward for compliance in future years.

(d) Eligibility: The REGS must be registered in accordance with the REC Regulations.

(iii) Dispute Resolution and Market Reforms

VPPA Guidelines state that any disputes arising from a VPPA are to be settled mutually between the contracting parties as per the terms of their agreement.

Currently, India has three main power exchanges (Indian Energy Exchange (“IEX”), Power Exchange India Limited (PXIL), Hindustan Power Exchange Limited (HPX)), and each determines its own market clearing price independently for segments like the Day-Ahead Market (DAM), Real-Time Market (RTM), and Term-Ahead Market (“TAM”) which leads to price fragmentation. Effective market price discovery is critical for the success of VPPAs. To this end, CERC has proposed “market coupling” across all power exchanges, which is expected to be implemented in early 2026. This reform will create a transparent, single market clearing price (MCP) nationwide, providing a reliable Settlement Price for VPPAs.

However, the IEX has filed an appeal (Appeal No. 298 of 2025) before the APTEL. This appeal challenges the CERC’s Order dated July 23, 2025, which directed Grid-India to implement a shadow pilot for market coupling in the TAM and other segments. As of now, APTEL has admitted the appeal and issued notice to the respondents, but there is no stay on the CERC’s order. The outcome of this appeal could significantly influence the future trajectory of market coupling and, by extension, the mechanisms for price discovery that underpin VPPAs and other financial instruments in the power sector.

2.12 Industrial Power Play: Proposed Amendments Set to Redefine Captive Generation Landscape

Draft Electricity (Amendment) Rules, 2026: On January 2, 2026, the MOP circulated a new draft amendment, proposing significant changes to Rule 3 of the Electricity Rules, 2005, which governs the qualification criteria for captive generating plants (“CGPs”). This new proposal, titled the Draft Electricity (Amendment) Rules, 2026 (“Draft Electricity Rules 2026”), supersedes the earlier draft issued on September 23, 2025, known as the Draft Electricity (Second Amendment) Rules, 2025.[18] Draft Electricity Rules 2026 were issued for stakeholder consultation and introduces several key changes to the captive power framework which are as follows:

(i) Broader Definition of ‘Ownership’: The Draft Electricity Rules 2026 expand the definition of “ownership” to align with modern corporate structures. Ownership can now be held not only directly but also through a holding company, its subsidiaries, or any other subsidiary of the holding company.

(ii) Expanded Scope of ‘Captive User’: The definition of “captive user” has been broadened. A captive user is now deemed to include its subsidiaries, its holding company, and any other subsidiaries of that holding company. All these entities are collectively treated as a single captive user for verifying compliance.

(iii) Flexible Assessment Period: Under the Electricity Rules, compliance was strictly determined on an “annual basis,” which was defined as a financial year. The Draft Electricity Rules 2026 introduces a flexible ‘assessment period’. Captive users can opt for this to be a full financial year or any other continuous period within that year, allowing for seasonality and operational variations.

(iv) Flexible Consumption Rules for Association of Persons (“AoP”): The Electricity Rules were rigid, requiring captive users in an AoP to consume electricity in proportion to their ownership shares, with a variation not exceeding 10%. Further, The Supreme Court in Dakshin Gujarat Vij Company Limited vs. Gayatri Shakti Paper and Board Limited and Anr. (Civil Appeal Nos. 8527-8529 of 2009) (“Dakshin Gujarat Judgement”), even prescribed a precise ratio of 1% of share: 1.96% of energy consumption based on the proportionality test.[19] The Draft Electricity Rules 2026 fundamentally changes the above said earlier approach. It proposes that while the benefit of captive consumption for an individual user is limited to their proportionate share, any consumption beyond that does not disqualify the CGP. The excess consumption by one member will be counted towards the collective 51% captive consumption requirement for the plant as a whole. Furthermore, it introduces a significant exemption i.e., if a member owns 26% or more of the CGP, the abovesaid proportionality requirement will not be applicable to them.

(v) Clear Framework for Verification of Captive Status: A two-tiered verification mechanism has been proposed. For intra-state projects, a nodal agency designated by the State Government will conduct the verification. For inter-state projects, the NLDC will be the verifying authority. An appeal mechanism through a “Grievance Redressal Committee” is also introduced.

(vi) Provisional Relief from Surcharges: A new provision has been introduced which proposes that cross-subsidy surcharge and additional surcharge shall not be levied while the verification of a CGP’s captive status is pending, provided the user submits a self-declaration. If the CGP subsequently fails verification, these surcharges must be paid along with a carrying cost which shall be calculated at the base rate of “Late Payment Surcharge” specified in the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022.

(viii) Clarification for SPV-Owned Generating Stations: In accordance with the Electricity Rules, in case of a generating station owned by a company formed as a special purpose vehicle (“SPV”), only a unit or some units may be declared as captive and, accordingly, the qualification tests will be applicable to such units only i.e., the user(s) of such units should use a minimum of 51% of the power generated from such units for captive consumption and should collectively hold not less than 26% of the proportionate equity of the company which can be attributed to such units. The Electricity Rules provided this flexibility exclusively to the generating stations owned by an SPV. However, the Draft Electricity Rules 2026 proposes to democratize this provision by extending unit-level ownership and consumption verification to all captive users, regardless of the generating company’s structure.

(viii) Changing Ownership: The Draft Electricity Rules 2026 proposes that if members’ ownership stakes change during the year, their proportionate consumption limits are calculated based on a weighted average of their shareholding over the assessment period. This avoids issues if a member buys or sells shares mid-year. This approach is in direct alignment with the principles established in the Dakshin Gujarat Judgement.

(ix) Clarification on Special Purpose Vehicles (“SPVs”): To remove ambiguity, the Draft Electricity Rules 2026 clarifies that an SPV established for owning and operating a generating station will be treated as an AoP for the purpose of these rules. This clarification codifies the position taken in the landmark Dakshin Gujarat Judgement.

2.13 GST Rollback is a ‘Change in Law,’ CERC Orders; Mandates Lower Tariffs for Power Projects

CERC declares GST Reduction on Renewable Equipment a Change in Law: When Good and Services Tax (“GST”) was introduced in 2017, renewable energy devices and their manufacturing parts were taxed at the rate of 5%. Subsequently, in 2021 this rate was increased to 12% and CERC through its orders recognised it as a ‘Change in Law’, permitting tariff adjustments. Recently, Notification No. 9/2025–Central Tax (Rate), dated September 17, 2025, has been issued by the Ministry of Finance, GOI which reversed the abovesaid position by reducing the GST rate on renewable energy devices and their manufacturing parts. Such change in the rate of GST from 12% to 5% has again resulted in a change in the cost of inputs of goods required for RE generation. Therefore, CERC, exercising its powers under Section 79(1) of the Electricity Act issued a suo motu order addressing the statutory change in the GST rates affecting renewable energy devices and their manufacturing parts[20].

(i) Applicability of the new rate: CERC recognised that the revised GST rate directly lowers the new project cost and this qualifies as a ‘Change in Law’. The order directs that in accordance with the anti-profiteering rules under Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of rate cuts must be transferred to procurers. It directed that the monthly tariff or charges need to be adjusted/ refunded from the date of the GST reduction event occurs. Thus, the 5% GST rate applies to all cases where the bid submission date is prior to September 22, 2025, and either:

(a) the invoice for goods/supply of services is raised on or after September 22, 2025; or

(b) consideration for the goods/supply of services has been received (whether in whole or part) and the tax has been paid on or after September 22, 2025. There has to be a clear one-to-one correlation between the projects, the supply of goods or services, and the invoices raised by the supplier of goods and services.

(ii) Further steps: CERC has directed that in instances where procurement, commissioning, commercial operation date or scheduled commercial operation date occurs on or after September 22, 2025, but the bid submission date precedes this date, RE generating stations and DISCOMs must reconcile the impact of tax reduction at their level. This reconciliation must happen before they approach the CERC for determination of tariff under the Change in Law provisions of the PPA in line with the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021 read with Section 63 of the Electricity Act. To facilitate this, RE generating stations must provide DISCOMs/ beneficiary entity(ies) with all relevant documentation. Such documentation needs to be supported by an auditor’s certificate, to enable reconciliation of reduced expenditure, demonstrating a clear one-to-one correlation between projects and invoices.

3 Key Judgements

3.1 Bustard v. Billion-watt Grid: Supreme Court draws new lines to balance conservation and green energy

Supreme Court’s Judgement on the Great Indian Bustard: In its landmark judgment in M.K. Ranjitsinh & Ors. v. Union of India & Ors. (Writ Petition (C) No. 838 of 2019), dated December 19, 2025, the Supreme Court of India (“Supreme Court”) has provided significant regulatory certainty for renewable energy projects in Rajasthan and Gujarat.[21] The judgment resolves the conflict between the conservation of the critically endangered Great Indian Bustard (“GIB”) and Lesser Florican (“LF”) and the development of power infrastructure.

In its earlier order dated April 19, 2021 (“2021 Order”), the Supreme Court imposed a sweeping, blanket restriction on the installation of overhead transmission lines across approximately 99,000 sq. kms., identified as priority and potential GIB habitat and mandated the undergrounding of all new low-voltage lines and, where feasible, high-voltage lines. However, the Supreme Court in its order dated March 21, 2024, recalled its 2021 Order, imposed an injunction aforesaid GIB habitat and appointed a 9-member expert committee (“Committee”) to resolve the conflict.

Subsequently, the Supreme Court in the abovesaid judgement has accepted and mandated the following key recommendations from the Committee’s reports for Rajasthan and Gujarat:

(i) Rationalization of GIB Habitat: The Supreme Court has drastically reduced the earlier identified vast area of 99,000 sq. km. to a revised priority area of 14,013 sq. kms. in Rajasthan and 740 sq. kms in Gujarat (“Revised Priority Area”).

(ii) Restrictions on New Projects and overhead powerlines: Within the Revised Priority Area, the Court has mandated the following: (a) complete prohibition on the installation of new wind turbines; (b) prohibition on new solar parks/ plants with a capacity exceeding 2 MW; (c) no expansion of existing solar parks; and (d) no new overhead powerlines except through dedicated power corridors and for capacities of 11 kV and below). No restriction on the laying of powerlines in the potential area (i.e., the area outside the Revised Priority Area) has been suggested by the Committee.

(iii) Insulated Cables: All existing and new power lines of 11 kV and below in the Revised Priority Area must be mitigated using insulated cables in a horizontal configuration or with bunching.

(iv) Powerline Corridors: Within the Revised Priority Area, all future power lines must be routed through the designated power corridors. Further, within the non-Revised Priority Area, all future lines are required to be routed through the powerline corridors and the routes are required to be optimised to maximize their shared common stretch to the extent possible.

(v) BFDs: The previous mandate under the 2021 Order for the installation of BFDs has been paused, pending the outcome of comprehensive scientific studies on their efficacy and feasibility.

(vi) Specific Powerline Mitigation Mandates:

(a) Rajasthan: The Supreme Court has mandated immediate undergrounding of the identified 80 km of 33 kV lines, with remaining 33 kV lines to be identified by the specified authorities within 3 months for mitigation through undergrounding, re-routing, or insulated cables. Further, 9 specific 66 kV lines must be re-routed subject to the finalization of the route within 6 months of the date of judgment. If undergrounding is not feasible, critical sections of remaining 66 kV and above lines must be re-routed away from the important GIB habitats in the Revised Priority Area. Additionally, 250 km of critical powerlines identified by Wildlife Institute of India must be undergrounded within 2 years form the date of this judgement.

(b) Gujarat: The Supreme Court has mandated immediate undergrounding or re-routing of 4 identified 33 kV lines located within the Revised Priority Area. If undergrounding/ re-routing is not feasible, then such lines must be converted to insulated cable arranged in horizontal configuration. Remaining 33 kV lines are required to be mitigated via undergrounding, re-routing, or insulated cables based on feasibility. The feasibility of abovesaid will be decided by the joint committee. Further, 9 identified 66 kV lines (64.9 km) located within the Revised Priority Area require immediate undergrounding, or if not feasible, re-routing to outside Revised Priority Area. Remaining 66 kV lines (10.2 km) in the Revised Priority Area will be mitigated on a case-to-case basis. For 220 kV and above lines, re-routing outside the Revised Priority Area or through designated power corridors, or horizontal configuration, will be decided case-by-case by the joint committee.

(vii) Time-Bound Mitigation: The Supreme Court has directed that all mitigation measures, including undergrounding and re-routing of power lines as suggested in the Committee report, must be initiated immediately and completed within 2 years from the date of this judgment.

(viii)Corporate Environmental Responsibility: In a significant observation, the Supreme Court expanded the concept of Corporate Social Responsibility (“CSR”) to include ‘Corporate Environmental Responsibility’. It held that under Section 135 and Section 166(2) of the Companies Act, 2013, the ‘Polluter Pays’ principle and Article 51A(g) of the Constitution of India, corporations have a fundamental duty to protect the environment. Consequently, the Court directed that the CSR funds must be directed towards ex-situ and in-situ conservation of GIB.

3.2 Reading the Fine Print: Supreme Court Upholds Sanctity of PPAs, Rejects Developer’s ‘Force Majeure’ Plea 

Supreme Court’s Judgement on Procedural Compliance and Sanctity of PPAs: The Supreme Court in its judgment in Chamundeshwari Electricity Supply Corporation Limited v. Saisudhir Energy (Chitradurga) Private Limited and Anr. (Civil Appeal No. 6888 of 2018), dated August 25, 2025, overturned the concurrent judgements of Karnataka Electricity Regulatory Commission (“KERC”) and the Appellate Tribunal for Electricity (“APTEL”).[22] The Supreme Court’s ruling centred on a solar power developer’s claim for an extension of the scheduled commercial operation date (“SCOD”) and the restoration of its encashed performance bank guarantee (“PBG”) due to failure in achieving the SCOD. The developer attributed the need for such extension to delay by the state transmission licensee in completing the construction of the power evacuation system, citing this as a ‘force majeure’ event. In its decision, the Supreme Court held the following:

(i) Failure to Invoke Correct Contractual Remedy and Mandatory Procedural Compliance: The Supreme Court held that contractual rights and remedies must be asserted within the framework of the agreement, not outside of it and appropriate provision for relief under the PPA must be invoked. It found that the developer failed to invoke the contractual relief under 2 procedural grounds. Firstly, the developer incorrectly invoked ‘force majeure’, as the delay by the state transmission utility did not fall within the PPA’s definition of a force majeure event. Secondly, the PPA did not provide for automatic extensions and the developer failed to use the appropriate remedy under Article 5.7, which was the correct provision for seeking an extension for such a delay. The ruling highlighted this failure to formally request an extension as a fatal omission. Furthermore, the court clarified that even if the claim had been valid, the notice requirement under the force majeure clause is not merely a formality but a condition precedent for invoking the clause.

(ii) Sanctity of Contract: On the principle of sanctity of contract, the Supreme Court found that the KERC and APTEL had transgressed their jurisdiction. By directing the restoration of the PBG, extending timelines, and mandating tariff renegotiation, the lower forums were effectively recasting the contract. The judgment reinforced that a PPA, being a commercial contract from a competitive bidding process, must be enforced strictly according to its express terms. Regulatory bodies cannot rewrite the agreement or alter the parties’ agreed-upon risk allocation under the guise of equity or fairness.

3.3 Second Look: Supreme Court Reconsiders Ban on Retrospective Green Clearances, Opts for ‘Balanced Approach’ Over Demolition

Supreme Court Reconsiders Ex Post Facto Environmental Clearances: Upon a review petition filed by the Confederation of Real Estate Developers of India (“CREDAI”), the Supreme Court in its judgement in CREDAI v. Vanashakti and Anr. (Review Petition (C) No. 003002 of 2025), dated November 18, 2025, has recalled its earlier judgment dated May 16, 2025, which is referred to as “Vanashakti Judgment”.[23] The central issue before the Supreme Court was the legality of granting ex post facto (retrospective) environmental clearances (“ECs”) to projects that commenced without obtaining prior clearance, as permitted by the Ministry of Environment, Forest and Climate Change’s (“MoEFCC”) notification in 2017 (“2017 Notification”) and the office memorandum of 2021 (“2021 OM”). The Supreme Court in the Vanashakti Judgment had struck down both these instruments, holding that the concept of an ex post facto EC is illegal and “completely alien to environmental jurisprudence.” That ruling mandated that projects built in violation must be stopped and demolished, even if penalty has been paid by the project proponent under the Environment Act, 1986.

The Supreme Court has now held that the Vanashakti Judgment was rendered per incuriam (in ignorance of binding precedents) as it failed to consider earlier co-equal bench decisions in D. Swamy v. Karnataka State Pollution Control Board (Civil Appeal No. 3132 of 2018) and Pahwa Plastics Private Limited v. Dastak NGO (Civil Appeal No. 4795 of 2021) which had upheld the 2017 Notification and 2021 OM, holding that the Environment (Protection) Act, 1986 does not prohibit the grant of ex post facto ECs in exceptional cases. The Supreme Court also found that the Vanashakti Judgement did not fully appreciate the ‘balanced approach’ taken in other key cases, where penalties were imposed instead of ordering demolition. Citing the devastating consequences of demolition, including the destruction of vital public infrastructure like an AIIMS hospital and the potential for increased pollution, the Supreme Court set aside the Vanashakti Judgement and restored the original writ petitions for a fresh hearing.

3.4 Power Shift: Karnataka High Court Strikes Down Central Rules, Reaffirms State Control Over Green Open Access

Karnataka High Court Strikes Down Central GEOA Rules: On June 6, 2022, the Central Government framed the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 (“Central GEOA Rules“) which among others restricted banking to a monthly basis and prescribed the charges to be levied for open access. Further, Rule 5(1) of the Central GEOA Rules provided that the Appropriate Commission may, if necessary, amend its regulations and such regulations shall be consistent with the Central GEOA Rules. Consequently, KERC framed the KERC (Terms and Conditions for Green Energy Open Access) Regulations, 2022 (“KERC GEOA Regulations“).  Several renewable energy generators

challenged both the Central GEOA Rules and the KERC GEOA Regulations before the Karnataka High Court, as being ultra vires the Electricity Act.

The Karnataka High Court in its judgement in Brindavan Hydropower Private Limited v. Union of India (Writ Petition No. 11235 of 2024) dated December 20, 2024, held that the Central Government had acted beyond its powers and struck down both the Central GEOA Rules and the consequent KERC GEOA Regulations.[24] The court reasoned that the Electricity Act, exclusively empowers the State Commissions to regulate all aspects of intra-state transmission and open access, including determining charges and conditions under provisions like Section 42 and Section 86 of the Electricity Act. The Central Government’s role is confined to policy formulation, and it cannot usurp the specific regulatory functions of an independent State Commission. The court also clarified that electricity banking is a contractual or promotional facility, not a statutory right. To prevent a regulatory vacuum, an interim arrangement was put in place, permitting monthly banking and setting interim charges until KERC frames fresh, independent regulations.

Subsequent to the judgment, KERC, on March 26, 2025, has promulgated the Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2025.[25] These new regulations revise the state’s open access framework, establishing updated charges such as commission-determined wheeling, cross-subsidy, and additional surcharges, implementing a monthly banking facility subject to an 8% charge, and setting standby supply at 125% of the normal energy rates.

3.5 Grid Discipline First: Supreme Court Backs Rajasthan Regulator’s Tough Stance on Open Access

Supreme Court Upholds RERC’s Open Access Regulations: The Rajasthan Electricity Regulatory Commission (“RERC”) issued the RERC (Terms and Conditions for Open Access) Regulations, 2016, which introduced significant restrictions for consumers. Notably, the regulations mandated that a consumer’s contracted demand with the distribution licensee would be reduced by the quantum of power scheduled through open access, and it introduced penalties for drawal variations.

After the Rajasthan High Court dismissed challenges to the aforesaid regulations, an appeal was filed before the Supreme Court. The appeal contended that the RERC lacked jurisdiction to regulate open access, particularly for inter-state transactions. It further argued that the conditions imposed constituted an unreasonable restriction on the statutory right to open access guaranteed under the Electricity Act, with a disproportionate impact on captive power plants (“CPPs”).

The Supreme Court in its judgment in Ramayana Ispat Private Limited and Anr. v. State of Rajasthan and Ors. (Civil Appeal No. 7964 of 2019) dated April 1, 2025, dismissed the appeal and upheld the aforesaid regulations.[26] It held that the Electricity Act clearly divides regulatory responsibility based on the stage of electricity flow. Inter-state transmission is governed by the CERC, but when electricity enters a state’s grid and affects intra-state operations and consumer

access, the State Commission’s jurisdiction applies. The court emphasized that the source of power is irrelevant for determining jurisdiction; what matters is the place of delivery, end-use and the effect on the grid within the state. The court found that the conditions, including penalties for drawal variations (Regulation 21) and the 24-hour advance scheduling requirement for inter-state open access (Regulation 26(7)), were not unreasonable restrictions but were necessary regulatory measures to ensure grid discipline, prevent market gaming, and maintain system stability. It concluded that the regulations do not foreclose the right to open access but merely operationalize it within a reasonable framework and are not discriminatory towards CPPs.

3.6 Pay Day: Supreme Court Rules ‘Change in Law’ Compensation and Interest Due from Day One

Supreme Court settles legal position on carrying cost and supplementary bill under change in law: The dispute began when Coal India Limited through a notification imposed the Evacuation Facility Charges (“EFC”) in December 2017 (“EFC Notification”), which Adani immediately flagged as a “Change in Law” event requiring compensation. Upon no agreement from the DISCOMs, a petition was filed by Adani before the RERC which partially allowed Adani’s claims but did not grant the full relief sought. Consequently, Adani appealed to the APTEL. Unsatisfied with the APTEL’s ruling, the DISCOMs appealed to the Supreme Court which in its judgement in Jaipur Vidyut Vitran Nigam Limited & Ors. v. Adani Power Rajasthan Limited & Anr. (Civil Appeal No. 4336 of 2025) dated May 23, 2025, dismissed the appeal and laid down the following legal position[27]:

(i) Compensation is from Day One:The purpose of the “Change in Law” clause is to restore the affected party to the same economic position as if the new charge never happened. Therefore, the compensation is due from the exact date the change in law notification i.e., the EFC Notification was implemented.

(ii) Carrying Cost:The carrying cost (interest on the delayed payment) is essential to truly compensate Adani for the time value of money they lost. The Supreme Court confirmed that this should be calculated at the contractually agreed Late Payment Surcharge (“LPS”) rate, which includes compounding. It clarified that the payment of carrying cost shall be from the date of promulgation of the Change in Law.

(iii) Supplementary Bill: A supplementary bill for Change in Law can be raised only after due adjudication by the competent forum.

Though concerning a non-renewable source, this judgment’s “Change in Law” principles are universally applicable and vital for the renewable energy sector.

4 Beyond the Horizon: Strategic Moves to Power India’s Sustainable Future

India is decisively advancing towards its ambitious renewable energy goals, underpinned by a dynamic combination of forward-thinking policy, technological innovation, and substantial investment. The nation has firmly established itself as a leading destination for renewable energy investments, driven by a holistic legislative and regulatory overhaul. Landmark reforms, such as the proposed amendments to the Electricity Act aimed at instilling financial discipline and the SHANTI Act opening the nuclear sector to private enterprise, signal a paradigm shift. This is complemented by sophisticated grid management frameworks, like the GNA amendments, designed to optimize transmission infrastructure, and strategic initiatives such as the National Green Hydrogen Mission and the Viability Gap Funding scheme for battery storage, which underscore a commitment to pioneering next-generation energy solutions.

However, as highlighted in this paper, the path to a fully sustainable energy landscape is complex and requires navigating significant challenges. The judiciary is actively carving a pragmatic path forward, as evidenced by the landmark Great Indian Bustard judgment, which provides critical regulatory certainty by thoughtfully balancing ecological preservation with infrastructure development. This, coupled with a maturing jurisprudence that reinforces the sanctity of contracts and clarifies crucial commercial principles like ‘Change in Law’ and carrying costs, is building a stable and predictable foundation for long-term investment. The introduction of innovative financial instruments like Virtual Power Purchase Agreements further broadens the avenues for corporate participation, accelerating the transition. India’s concerted efforts to augment grid infrastructure, enhance storage, and encourage private participation remain pivotal. With a clear government mandate and growing private investment, the prospects for the renewable energy sector are exceptionally promising, yet sustained focus and agile implementation will be essential to realize the full potential of these transformative initiatives.

Foot Notes

[1] For details, please visit here.

[2] For details, please visit here.

[3] For details, please visit here.

[4] For details, please visit here.

[5] For details, please https://prsindia.org/files/bills_acts/bills_parliament/2025/The_SHANTI_Act_2025.pdf

[6] For details, please visit here.

[7] For details, please visit here.

[8] For details, please visit here.

[9] For details, please visit here.

[10] For details, please visit here.

[11] For details, please visit here.

[12] For details, please visit here.

[13] For details, please visit here.

[14] The co-branding arrangement refers to a form of partnership between two companies to share the manufacturing facilities, wherein the ‘Brand Owner’ and the ‘Original Equipment Manufacturer (OEM) execute an arrangement through which the OEM allows the Brand Owner to use its manufacturing facility to manufacture products for the Brand Owner.

[15] Brand Owner means a registered company with no solar PV module manufacturing facilities worldwide that markets and sells modules of an ALMM enlisted OEM under a co-branding agreement.

[16] Original Equipment Manufacturer (OEM) means an ALMM enlisted solar PV module manufacturer that produces modules marketed by a Brand Owner under a co-branding agreement.

[17] For details, please visit here.

[18] For details, please visit here.

[19] For details, please visit here.

[20] For details, please visit here.

[21] For details, please visit here.

[22] For details, please visit here.

[23] For details, please visit here.

[24] For details, please visit here.

[25] For details, please visit here.

[26] For details, please visit here.

[27] For details, please visit here.

Authors: Akshay Malhotra – Partner, Kush Saggi, Managing Associate, Aishik Majumder – Senior Associate, Kopal Bhargava – Associate

Disclaimer: This publication only highlights key issues and is not intended to be comprehensive. The contents of this publication do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this publication should be considered an advertisement or solicitation of TT&A’s professional services.