Projects and Infrastructure | October 2025 – March 2026 – Veritas Legal

Regulatory Updates

Uttar Pradesh – New Framework for Captive Renewable Energy Projects

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The Uttar Pradesh Electricity Regulatory Commission (“UPERC”) on 17 October 2025,  released the UPERC (Captive and Renewable Energy Generating Plants) Regulations, 2024 (“Captive Regulations”) for captive and renewable energy generating plants in the State. Key features of the said regulations are as follows:

• Captive Requirements: The Captive Regulations lays down the requirement of compliance with central captive requirements of captive users collectively holding at least 26% ownership of captive generating plant and consumption of a minimum of 51% of the electricity generated thereto annually.
• Open access and energy banking: Captive renewable projects are permitted to avail open access and to bank surplus energy in specified time blocks, subject to monthly limits, banking charges, and prescribed accounting treatment.
• Scheduling and grid discipline: Projects above 5MW installed capacity are required to comply with forecasting, scheduling, and deviation settlement mechanisms, ensuring grid discipline and operational transparency.
• Metering & Accounting: Joint meter reading and coordination with State Load Despatch Centre (“SLDC”) for energy accounting and scheduling data exchange are mandated for energy accounting and billing purposes.

Relaxations to the General Network Access Regulations

CERC, through a suo motu order dated 8 December 2025, has addressed difficulties in the implementation of the third amendment to the Central Electricity Regulatory Commission (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022 (“GNA Regulations“) and promulgated the following relaxations:

• Extended timelines: A one time extension for 2.5 months, totalling to a timeline of 5.5 months has been allowed to developers to either convert to entities possessing solar-hour access or otherwise apply for additional capacity. Renewable power park developers have been allowed an additional 75 days to submit information on the scheduled commercial operation date.
• Additional equipment for technical compliance: Prior to the relaxation, developers had to furnish additional bank guarantees upon installation of equipment to meet reactive power obligations or account for technical losses. As per the CERC notification, so long as the active power injection is under the approved limit under the GNA Regulations, equipment installed solely for technical compliance will not be treated as increased capacity and will not require any additional bank guarantees.
• Interim grid charging for Energy Storage Systems (“ESS”): ESS were restricted from grid charging due to zero drawal permitted until CTUIL completed detailed drawal studies. CERC has now allowed interim grid charging through temporary GNA (T-GNA), subject to real-time system margins and connectivity quantum.
• Land parcel change: Under the revised GNA Regulations, the developers were only allowed to change their land parcels once. Now, the CERC has clarified that said restriction only applies to changes post the amendment, allowing developers to modify their land parcel details as per the amended framework.
• Non-solar hour access by power park developers: Solar park developers can apply for non-solar hour access only via the right of first refusal mechanism and not by independent applications. To qualify under the first refusal mechanism, the solar park developer shall have in-principle or final connectivity, possess effective GNA or had applied for connectivity before the third amendment.
• One-time source change: CERC has allowed entities that obtained in principle connectivity before the amendment to exercise a one time source change after 9 September 2025, even if a source change has been exercised earlier.
• Submission of land documents: Lastly, owing to delay in issuance of coordinates by CTUIL and corollary delay in final connectivity grants, developers shall be allowed nine months from the date of issuance of coordinates by CTUIL for submission of land documents.

Guidelines for Virtual Power Purchase Agreements

On 24 December 2025, the Central Electricity Regulatory Commission (“CERC“) released the Guidelines for regulation of Virtual Power Purchase Agreements (“VPPA“), which establish a statutory framework of VPPAs in India. The key features of the same are:

• Nature of VPPA: A VPPA is a bilateral, over-the-counter, non-tradable and non-transferable contract executed between a renewable energy generating station (“REGS“) and a consumer or designated consumer for a minimum term of 1 (one) year.
• Commercial settlement mechanism: The consumer or the designated consumer and REGS mutually agree to a price for sale of electricity under VPPA (“Strike Price“). The difference between the Strike Price and the price discovered by way of a power exchange or any other authorized mode of sale shall be settled amongst the parties with due regard to the contractual provisions.
• Renewable energy certificates: While there is no actual transfer of energy, renewable energy certificates proportionate to the energy contracted are transferred to the consumer, which may be used by consumer to meet their renewable purchase obligations / renewable consumption obligations.

Clarifications to GNA Regulations issued for Additional Renewable Energy Generation Capacity

On 9 January 2026, the Central Transmission Utility of India (“CTUIL“) issued an advisory with certain clarifications on mismatch of installed capacity between simulation study models and connectivity grant letter. Key clarifications are:

• Relaxation to Renewable Energy Generators: Installation of additional capacity in the form of inverters or equivalent equipment is now allowed only for technical compliance at the point of injection, provided that active power injection does not exceed the granted connectivity quantum.
• Technical Undertaking to be Submitted: Generators need to file an undertaking setting out a detailed account of necessity for additional capacity installation. Additionally, the same needs to be substantiated by steady state simulation results.
• Regularisation via Consultation Meetings for Evolving Transmission Schemes (CMETS): Applications will be processed for issuance of a detailed connection offer and subsequently regularised in CMETS during the transition period.
• Cap on Revisions: Simulation study reports will be allowed up to three revisions, beyond which fresh application is required.

Amendment to the Captive power norms

The Ministry of Power, via a gazette notification dated 13 March 2026, has released the Electricity (Amendment) Rules, 2026 (“Amendment Rules“) amending certain provisions of the Electricity Rules, 2005. The major changes implemented include the following:

• Definition of Ownership: Prior to the Amendment Rules, “ownership” did not expressly account for indirect holdings. The Amendment Rules expands this definition to include ownership through holding companies, subsidiaries, and fellow subsidiaries, and treats such related entities as a single captive user.
• Consumption norms for power plant set up by Association of Persons (AOPs): Captive users may now consume power based on operational needs, with proportionate consumption being determined on a weighted average mechanism basis for fluctuating ownership patterns through a financial year. While captive conditions are required to be satisfied collectively by all the captive users, captive consumption by an individual captive user shall be admissible only up to 100% of its proportionate consumption, with excess consumption liable to cross-subsidy and additional surcharge. This proportionality restriction does not apply to users holding at least 26% ownership. Special purpose vehicles are now expressly treated as association of persons.
• Verification Framework: The Amendment Rules also introduce a formal verification framework for captive status, to be verified on an annual basis, along with an appellate mechanism. Pending verification, surcharge is not levied subject to declaration by captive user; however, it becomes payable with carrying cost if captive status is not met.

Regulations for trading of carbon credits

With the Central Electricity Regulatory Commission (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026, the Central Electricity Regulatory Commission (“CERC“) has established a framework to trade carbon credit certificates (“CCC“) on power exchanges in India, aligned with Carbon Credit Trading Scheme, 2023.

Some key features of these regulations are as follows:

• Dual Market Structure: The regulations provide for a dual-market structure comprising (i) a compliance market for obligated entities, and (ii) an offset market for non-obligated entities.
• Trading Platform Restriction: CCCs are to be traded primarily through power exchanges, unless otherwise specifically permitted by the Commission.
• Trading Frequency: Transactions in CCCs are proposed to be conducted monthly or in such periodicity as approved by the Commission.
• Role of Power Exchanges: Recognized power exchanges will facilitate trading, price discovery, and send reports for executed transactions for CCCs within a regulated environment.
• Registry Mechanism: A centralized registry (designated to Grid Controller of India) will record issuance, ownership and transactions of CCCs, including updating accounts through debit and credit mechanisms.

Guidelines for Storage and Handling of Waste Solar PV Modules, Panels and Cells

In March 2026, the Central Pollution Control Board, under the framework of the E-Waste (Management) Rules, 2022, issued Version 1.0 of the “Guidelines for Storage and Handling of Waste Solar Photo-Voltaic Modules or Panels or Cells”. The guidelines provide a comprehensive framework for the environmentally sound handling, transportation, and storage of end-of-life solar photovoltaic (“Solar PV“) waste, including modules, panels, cells, and associated components, with the objective of preventing environmental contamination and protection of the health and safety of the environment.

Some key features of the guidelines are as follows:

• Prohibition on Improper Disposal: Solar PV waste shall not be disposed of or dumped in open areas or landfills due to the risk of release of hazardous substances, including heavy Such waste must be channeled only through authorized recyclers or registered entities.
• Producer Responsibility: Producers and manufacturers are required to establish structured collection and take-back systems, disclose collection points and authorized recyclers, and facilitate retrieval of end-of-life solar equipment.
• Transportation Requirements: Transportation of solar waste must be carried out in covered vehicles and if intended for final disposal, must comply with the provisions of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016.
• Storage and Handling Standards: Solar PV waste must be stored in covered, dry, and well-ventilated spaces with impervious flooring to prevent soil and groundwater contamination.
• Safety, Monitoring and Record-Keeping: Entities handling solar waste must ensure regular inventory management, monthly inspection of storage facilities, maintenance of records, and reporting of incidents such as damage, leakage, or fire. Personnel must be provided with appropriate personal protective equipment and respiratory protection where required.

Central Electricity Regulatory Commission (Terms and Conditions of Tariff) (Second Amendment) Regulations, 2026

The CERC, through the CERC (Terms and Conditions of Tariff) (Second Amendment) Regulations, 2026, has expanded the tariff framework to formally recognise the role of Integrated Energy Storage Systems (“IESS“) within the electricity sector. Key amendments are as follows:

• Applicability: Earlier, the regulations applied to tariff-based determination for generating stations and transmission systems, including coal/lignite linkage cases, while excluding competitive bidding and renewable projects. The amendment extends to include coal, lignite, and gas-based stations and inter-state transmission system (“ISTS“), installing integrated energy storage systems for supply to beneficiaries or ISTS customers.
• Commercial operation date (“COD”): The amendment extends the Grid Code-based COD determination framework to integrated energy storage systems installed with generating stations or transmission systems.
• Inclusion of Energy Storage Systems under Supplementary Tariff Framework: Earlier, Regulation 8(1) covered tariff for generating and transmission assets with supplementary tariff only for emission control systems. The amendment adds integrated energy storage systems in coal, lignite or gas based thermal generating systems, allowing supplementary tariff claims within 90 days of COD.
• Introduction of Supplementary Tariff for Energy Storage Systems: The amendment expands the tariff framework to include supplementary charges for integrated energy storage systems, covering both fixed storage and energy-related costs, to be determined separately by the Commission.

Case Summaries

Supreme Court’s revised orders for GIB conservation

The Supreme Court by its order dated 19 December 2025 (“2025 Order“) in the matter of M.K. Ranjitsinh & Ors. v. Union of India & Ors W.P. (C) 838 of 2019, has revised its past orders dated 19 April 2021 (“2021 Order“) and 21 March 2024 (“2024 Order“) in the same matter aimed at conservation of the Great Indian Bustard (“GIB“), with a view to balancing environmental protection and renewable energy development.

The 2021 Order designated an area of 99,000 sq. km. as priority and potential GIB habitat and imposed restrictions on setting up overhead transmission lines. The same severely hampered the solar energy production in the area, leading to the filing of an interim application in 2021 requesting a more balanced approach, following which the Supreme Court constituted an expert committee and revisited the issue. Pursuant to the 2025 Order, the Court has concluded the following:

• The priority area has been substantially narrowed down, limiting it to approximately 14,013 sq. km. in Rajasthan and 740 sq. km. in Gujarat.
• As a mitigation measure, even for the area outside the priority area, all future transmission lines should be routed through power line corridors. Further, power lines stemming from different renewable energy pooling stations but terminating at a common grid pooling station shall be optimized to maximize overlap.
• Pre-existing high-risk transmission lines are to be undergrounded or rerouted. Further, a substantial chunk (80 kms) of the 33kV lines in Rajasthan, has been directed to be undergrounded, with remaining lines to be undergrounded, rerouted or insulated.
• Power lines of 11 kV or below to be addressed with either insulated cables in a horizontal configuration or to be bunched.
• Wide power corridors of 5 km and 2 km to be created in Rajasthan and Gujarat, respectively. Within priority areas, no new power lines, wind turbines or solar plants exceeding 2 MW capacity are permitted.

APTEL Upholds Wind Developer’s Deemed Generation Compensation Claim

The Appellate Tribunal for Electricity (“APTEL”) has set aside a Rajasthan Electricity Regulatory Commission (“RERC”) order in the matter of Tanot Wind Power (Appeal No. 108 of 2018) that had dismissed a wind developer’s petition for compensation arising from repeated curtailment of its project’s generation.

By way of background, Tanot Wind Power (“Tanot”) commissioned a 120 MW wind project in phases in 2015 under power purchase agreements with Jaipur Vidyut Vitran Nigam Ltd. (JVVNL). Despite must-run status for renewable projects, SLDC repeatedly backed down generation, leading to significant revenue loss. Tanot claimed that such curtailments were arbitrary and due to transmission constraints including line failures and filed a petition before RERC seeking compensation thereto. RERC rejected the said petition in 2017, relying on SLDC records to justify curtailments.

Tanot appealed the RERC’s order and APTEL held that:

• SLDC must make all efforts to evacuate available power, with curtailment permissible only for grid security or safety
• As per its earlier decision in National Solar Energy Federation of India v. Tamil Nadu Electricity Regulatory Commission and Ors. (Appeal No. 119 of 2021), curtailments by SLDC are not justified and any curtailment below 50.05 Hz is not in accordance with the provision of the relevant grid code and hence illegal, entitling Tanot to deemed generation / compensation.

Supreme Court Upholds Maharashtra’s Right to Withdraw Electricity Duty Exemptions

In a significant ruling on 25 March 2026 in the State of Maharashtra & Others v. Reliance Industries Ltd. & Others, the Supreme Court upheld the Maharashtra government’s power to withdraw electricity duty exemptions granted to captive power producers.

Background:

• The dispute stems from a 1994 policy under the Bombay Electricity Duty Act, 1958 granting exemption from electricity duty to captive power plants, which was subsequently modified by notifications in 2000 and 2001, resulting in levy of duty on such units. Although the exemption was restored prospectively in 2005, it did not cover the intervening period (2000–2005), leading to demand of arrears.
• Aggrieved industries challenged the notifications and demand notices before the Bombay High Court, which set them aside as arbitrary and discriminatory. The State of Maharashtra thereafter appealed to the Supreme Court.

Key Takeaways:

• The Supreme Court held that tax exemptions are concessions/ privilege, not vested rights, and may be withdrawn in public interest; doctrines of promissory estoppel and legitimate expectation do not apply in such cases.
• It upheld the State’s power to modify/withdraw exemptions and set aside the High Court’s ruling, emphasising limited judicial review in fiscal policy matters unless the governmental decision is manifestly arbitrary.
• However, the Court clarified that such withdrawal must be fair and reasonable, requiring reasonable notice to avoid undue hardship from abrupt changes.

Supreme Court Upholds Generation Based Incentives for Renewable Projects

In Southern Power Distribution Company of Andhra Pradesh Ltd. & Anr. v. Green Infra Wind Solutions Ltd., the Supreme Court delivered a significant ruling for India’s renewable energy sector, resolving a long-standing dispute over Generation-Based Incentives (“GBI“).

Background:

• The dispute arose when Andhra Pradesh DISCOMs sought to adjust GBI against tariffs payable to generators, despite the scheme expressly providing that GBI is over and above tariff and shall not be considered in tariff determination. The GBI scheme, introduced by the Ministry of New and Renewable Energy to promote wind power, entitles developers to ₹0.50/kWh for electricity supplied to the grid, subject to certain caps, to encourage investment in renewable energy.
• The Andhra Pradesh Electricity Regulatory Commission, relying on its 2015 tariff regulations, allowed such deductions in 2018. However, wind power developers challenged this before APTEL, which ruled in their favour and ordered refunds with interest. The matter was subsequently escalated to the Supreme Court, raising key questions concerning tariff determination and the treatment of government incentives.

Key Findings:

• The Supreme Court held that GBI is payable over and above tariff and cannot be adjusted in a manner that defeats its purpose. While tariff determination lies with the regulatory commissions, such powers are not absolute and must be exercised in alignment with the objective of government incentives.
• The Court clarified that “taking into account” incentives does not mean automatic deduction, but requires a purposive approach that preserves the intent of the scheme. Incentives provided by the government must flow fully to generators and cannot be neutralized through tariff structuring or regulatory mechanisms.

For more information contact:

Jhinook Roy
Partner & Practice Head – Projects & Infrastructure
jhinook.roy@veritaslegal.in

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