Projects, Infrastructure And Energy Newsletter | May-July 2025

We are pleased to present the second edition of the Infrastructure, Projects and Energy Newsletter. This edition captures the major judicial pronouncements and key regulatory developments across the renewable energy, road, electricity, power, oil and gas sectors. Through this newsletter, we seek to highlight the shifting regulatory and legal frameworks and equipping stakeholders with strategic insights.

Judicial Pronouncements

Supreme Court upholds APTEL ruling in favour of Adani Power Rajasthan Ltd. on 'Change in Law' compensation

The Supreme Court ("SC") on May 23, 2025, upheld the decision of the Appellate Tribunal for Electricity ("APTEL") allowing Adani Power Rajasthan Ltd. ("APRL") to claim compensation and Late Payment Surcharge (LPS) from Jaipur Vidyut Vitran Nigam Ltd. ("JVVNL"). The dispute arose from increased operational costs incurred by APRL due to Coal India Limited's ("CIL") notification dated December 19, 2017, which imposed Evacuation Facility Charges (EFC).

APRL duly notified JVVNL of the said CIL notification, asserting that it constituted a 'Change in Law' event under Article 10 of the Power Purchase Agreement ("PPA"), and on failure to receive any suitable response from JVVNL, approached the Rajasthan Electricity Regulatory Commission ("RERC") under Section 86 of the Electricity Act, 2003. After only partial acceptance of its claim by RERC, APRL appealed to APTEL, which held that the CIL's notification did in fact qualify as a 'Change in Law' and entitled APRL to compensation.

In dismissing JVVNL's appeal, the SC affirmed APTEL's interpretation and found that no substantial question of law arose under Section 125 of the Electricity Act, 2003. Importantly, the SC clarified that tariff adjustments must take effect from the date of the 'Change in Law' event, not from the date of adjudication or invoice. It also held that supplementary bills become relevant only after adjudication, pursuant to a joint reading of Articles 10.5.2 and 8.8 of the PPA.

DLL Analysis - The SC's ruling firmly upholds the sanctity of 'Change in Law' provisions, reinforcing that power producers are entitled to timely compensation for statutory cost escalations. By affirming that restitution must be effected from the date of the triggering event, the judgment ensures that generators are not left financially exposed due to regulatory or governmental actions.

Case title: Jaipur Vidyut Vitran Nigam Ltd. & Ors. v. Adani Power Rajasthan Ltd. & Anr., 2025 INSC 770

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Supreme Court rejects Powergrid Corporation of India Limited's ("Powergrid") claim for additional capitalization under Tariff Norms

The Supreme Court ("SC") in its judgement dated May 5, 2025, analyzed the 2004 Tariff Regulations, ruling that transformer replacements did not qualify for additional capitalization since they were routine operational expenses, not "additional work" under the law. The Court rejected Powergrid's argument that the damaged units could be written off, noting that the transformers had failed suddenly due to internal faults and fire, rather than age-related wear and tear. It further clarified that Powergrid's self-insurance policy covered fire damage regardless of the cause, making the replacements an internal cost to be borne by the utility.

Powergrid had contested a 2011 order of the Appellate Tribunal for Electricity ("APTEL") before the SC, seeking approval for costs related to replacing three failed transformers in its Rihand I transmission system. The transformers caught fire in 2006, forcing Powergrid to temporarily divert equipment from other substations. Powergrid subsequently sought regulatory approval to write off the damaged units and capitalize the replacements under tariff rules. However, both the Central Electricity Regulatory Commission ("CERC") and APTEL denied these claims, holding that the costs should be met from internal reserves.

The SC upheld the findings of CERC and APTEL, concluding that replacement of Inter-Connecting Transformers (ICTs) did not fall within the permissible scope for additional capitalization under the Tariff Regulations, 2004. The judgment emphasized that such replacements constituted normal operation and maintenance activities, which fall within the utility's duty to maintain a reliable transmission system rather than qualifying as capital expenditure. Consequently, the Court directed that the associated costs must be borne from Powergrid's self-insurance reserve.

The Court dismissed Powergrid's appeal, holding that beneficiaries shouldn't bear these expenses through tariffs. It further held that the fire was the proximate cause of damage, with no intervening cause, thereby firmly establishing the applicability of the self-insurance policy. The judgment reinforces that such replacements fall within routine operations and are not eligible for capital cost recovery, ensuring that utilities absorb such expenses through operational or insurance provisions rather than consumer tariffs.

DLL Analysis - The SC's ruling establishes a clear boundary between routine operational expenses and capital investments in the power sector, ensuring consumers aren't burdened with costs of equipment failures. Transformer replacements after unexpected events, like fire, must be absorbed by utilities through insurance or operational funds, not via consumer tariffs. This decision maintains regulatory discipline while protecting consumer interests, setting an important precedent for distinguishing between ordinary maintenance and legitimate capital expenditures in infrastructure projects.

Case title: Powergrid Corporation of India Limited v. Central Electricity Regulatory Commission & Ors, 2025 INSC 626

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Supreme Court puts an end to ex-post facto Environmental Clearances

The Supreme Court ("SC") in its judgement dated May 16, 2025, has categorically barred ex-post facto Environmental Clearances ("ECs"). The court struck down the Ministry of Environment, Forest and Climate Change's (MoEFCC) Notification dated March 14, 2017, and the Office Memorandum dated July 7, 2021, which allowed industrial projects to obtain ex-post facto ECs, holding it in violation of fundamental rights guaranteed under Article 21 of the Constitution of India that guarantees the right to live in a pollution free environment and the right to health.

The Court ruled that prior ECs required under the EIA Notification dated September 14, 2006, are a mandatory legal safeguard, not a mere formality, and permitting retrospective approvals violates the precautionary principle, a cornerstone of India's environmental law. The decision nullified the regulatory workaround that had enabled violators to legalize projects after commencement, emphasizing that environmental damage cannot be undone through belated assessments.

The Court emphasized that a prior EC is non-negotiable, and that a project initiated without an EC not only constitutes a "gross illegality" but also acts against the society at large. While the judgment protects previously granted ex-post facto ECs to avoid economic disruption, it bars the government from issuing any future circulars/orders/OMs/notifications permitting such clearances, leaving non-compliant projects vulnerable to penalties, shutdowns, or legal challenges.

DLL Analysis - The SC's decision decisively reasserts the legal sanctity of environmental due diligence as a prerequisite, not a procedural afterthought, and makes compliance stricter for future businesses. For infrastructure and energy developers, this translates into heightened legal and financial risk for any project initiated without an EC in place. While the decision may temporarily impact the pace of project approvals, in the longer term, it will likely enhance the credibility and sustainability of infrastructure development in India, particularly for international Investors and lenders who prioritize ESG compliance.

Case title: Vanashakti v. Union of India, 2025 INSC 718

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MERC orders refund of excess charges to GPIL

The Maharashtra Electricity Regulatory Commission ("MERC"), via its order dated June 19, 2025, directed the Maharashtra State Electricity Distribution Co. Ltd. ("MSEDCL") to refund excess wheeling and transmission charges collected from Ghatge Patil Industries Ltd. ("GPIL"), a wind power generator and captive open access consumer, for the period from August 2018 to May 2023, along with applicable interest, within one month from the date of this order.

GPIL had approached the MERC, contending that MSEDCL had incorrectly levied charges based on the total generation from its wind project, rather than on the actual energy drawl at its manufacturing facilities, contrary to established regulatory principles. MERC concurred with GPIL and reaffirmed that, under the Distribution Open Access Regulations, 2016 (as amended in 2019), billing of open access charges is based on drawl at the consumer end and to avoid any billing disputes, transmission changes shall also be levied on energy drawl at the consumer end.

MERC also took note of MSEDCL's repeated procedural lapses, including delays, inadequate submissions, and inconsistent positions across regulatory forums. It found that MSEDCL's billing practice of charging based on generation rather than drawl was inconsistent with both the regulatory framework and prior MERC orders.

Further, MERC rejected MSEDCL's argument regarding limitation and held that the issue of the applicability of a limitation period would not be applicable on the issue of refund of wheeling and transmission charges on open access transactions.

Accordingly, MERC directed MSEDCL to refund the excess charges collected from GPIL for the specified period, after verification of GPIL's claims, within one month from the Order date. However, it denied GPIL's request for legal costs, citing procedural reasons and the absence of specific prior directions from the Commission regarding refunds for such open access consumers.

DLL Analysis - This order firmly reiterates the principle of fair and accurate billing in the renewable energy and open access sectors. By directing the refund of excess wheeling and transmission charges, MERC reinforces its earlier decisions on similar issues underlining regulatory consistency. MERC has made it unequivocally clear that charges must be based on actual drawl at the consumption end, not on gross generation, reflecting a consumer-protection-oriented approach. For project developers and industrial consumers, this decision underscores the need to closely scrutinize utility billing, identify systemic overcharges, and pursue refund claims where warranted.

Case title: Ghatge Patil Industries Ltd. v. Maharashtra State Electricity Distribution Company Limited (MSEDCL), Case No. 150 of 2024

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UERC denies request for additional rooftop solar capacity beyond 1 MW limit.

The Uttarakhand Electricity Regulatory Commission ("UERC") in its order dated July 08, 2025, rejected the application filed by Opto Electronics Pvt. Ltd, a unit of DPSU India Optel Limited under the Ministry of Defense, that sought relaxation of the 1 MW capacity ceiling prescribed under Regulation 37 of the UERC (Tariff and Other Terms for Supply of Electricity from Renewable Energy Sources and non-fossil fuel-based Co-generating Stations) Regulations, 2023 ("RE Regulations 2023"). Opto Electronics had requested approval to install an additional 600 kW of rooftop solar capacity under the RESCO model, thereby increasing their total installed capacity to 1.60 MW. This request was made in reference to the MNRE's PM-Surya Ghar: Muft Bijli Yojana, which aims to saturate all technically feasible rooftop spaces on central government buildings with solar photovoltaic systems.

UERC, after considering the submissions from Opto Electronics, Uttarakhand Power Corporation Ltd. (UPCL), and Uttarakhand Renewable Energy Development Agency (UREDA), held that the 1 MW ceiling for grid-interactive rooftop solar PV (GRPV) systems under net metering is clearly specified in Regulation 37 of the RE Regulations 2023, and applies to all eligible consumers other than domestic ones. The UERC noted that while the MNRE's guidelines under the PM-Surya Ghar scheme promotes rooftop solar adoption, it allows implementation through various arrangements like gross metering, net billing, and net metering, subject to the approval of the respective State Electricity Regulatory Commission. Therefore, the MNRE guidelines do not mandate installation under net metering, nor do they override or supersede State Commission regulations, including the 1 MW capacity limit.

The Commission thus dismissed the plea for relaxation, reaffirming that the statutory cap under the state regulatory framework governs the permissible rooftop solar capacity eligible for net metering benefits.

DLL Analysis - The UERC's order strongly reiterates the primacy of State Electricity Regulatory Commission regulations in governing renewable energy deployment within their jurisdiction. It underscores the principle that national policy initiatives and central government schemes, while important for promoting clean energy, must align with and operate within the binding parameters of state regulatory provisions. The decision highlights the necessity for renewable energy project developers and policymakers to ensure close coordination between central schemes and State Commission regulations to effectively implement clean energy goals without procedural conflicts or regulatory non-compliance.

Case title: Opto Electronics Pvt. Ltd. v. Uttarakhand Power Corporation Ltd. And Ors., Misc. Appl. No. 05 of 2025

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Delhi High Court grants interim relief in registration of LNG Terminals

The Delhi High Court ("Court") vide its interim order dated on July 03, 2025, granted significant interim relief to LNG terminal operators - namely, Petronet LNG Limited and GSPC LNG Limited ("Petitioners") from registration under Petroleum and Natural Gas Regulatory Board (Registration for Establishing and Operating the Liquefied Natural Gas (LNG) Terminals) Regulations, 2025 ("PNGRB Regulations").

The main question of law the Court opined upon was whether the Petitioners were subject to statutorily mandated registration of LNG terminals as per the PNGRB Regulations. The Court upheld that the proviso to Section 15(1) of the impugned PNGRB Regulations expressly exempts existing entities from the registration requirement, provided that the Board is informed of their activities within 6 months from the appointed day. The appointed day, as defined under Section 2(c) of the said regulations, is June 25, 2007, i.e., is the date on which the Petroleum and Natural Gas Regulatory Board was established. The Petitioners have been operating LNG terminals since 2004 and 2007 respectively, both of which are prior to the 'appointed day' under the Petroleum and Natural Gas Regulatory Board Act, 2006 ("PNGRB Act") and hence, are not covered by Section 15 of the PNGRB Act.

The Court observed that the Petitioners commenced their operations prior to June 25, 2007, and therefore, prima facie, the Petitioners are not required to seek any registration as there is an exemption set out in the proviso of Section 15 (1) of the PNGRB Regulations. As an interim measure, the Court directed that no coercive action is to be taken against the Petitioners for not seeking registration under the impugned regulations until the matter is finally adjudicated. The case is now listed for further hearing on October 9, 2025.

DLL Analysis - This interim order provides a timely reminder to protect legacy operations from retrospective compliance burdens and also ensures continuity in operations without the risk of penalties or interruption in supply. However, this relief also introduces a sense of uncertainty as the mandatory registration requirement will be subject to the final ruling. While the final decision on whether expansion of activities by pre-appointed day entities would mandate registration is yet to be resolved, the Court's reasoning thus far offers critical guidance.

Case title: Petronet LNG Limited and Anr. v. Petroleum and Natural Gas Regulatory Board, W.P.(C) 8891/2025

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Regulatory Updates

APERC releases draft BESS Regulations

The Andhra Pradesh Electricity Regulatory Commission (APERC) on June 30, 2025, issued the draft Planning, Procurement, Deployment and Utilization of Battery Energy Storage Systems (BESS) Regulations, 2025 ("Regulations"). The primary objective of these Regulations is (a) to enable deployment and utilization of BESS as part of generation, transmission, and distribution assets; (b) to facilitate the participation of BESS in ancillary services and energy markets; (c) to promote cost-effective energy storage solutions that support grid stability, frequency management, and renewable energy integration; (d) to establish a framework for aggregators and third-party BESS developers to participate in the electricity market. These Regulations shall apply to all licensees, generating companies, renewable energy developers, aggregators, BESS service providers, and other entities involved in the deployment, operation, or utilization of BESS within the State of Andhra Pradesh.

The Regulations set out the ownership and business models basis which the BESS may be developed, owned and deployed. The Regulations also provide that BESS may also be utilized to provide ancillary services such as frequency regulation (primary, secondary, tertiary), spinning and non-spinning reserves, voltage support and black start services. Aggregators and ancillary service providers may enter into commercial agreements with licensees or other market participants for the provision of BESS services. As per the Regulations, the BESS installations shall conform to technical standards specified by the Central Electricity Authority ("CEA") and Ministry of New and Renewable Energy. The APERC Green Energy Open Access Charges and Banking Regulation 2024, as amended from time to time, shall govern the open access and charges. BESS procurement by licensees shall be undertaken through competitive bidding, subject to guidelines issued by the Government of India, if any.

DLL Analysis - The Regulations provide a formal, structured way to add BESS to the electricity grid. BESS is very effective in keeping the grid stable even when renewable energy generation fluctuates. This means less risk of blackouts or voltage problems as clean energy use grows. By offering a clear regulatory framework for BESS integration, these Regulations make Andhra Pradesh more attractive for companies and investors in the storage and renewable energy fields. This aligns with the state's vision to become a clean energy hub and a leader in India's green transition. These Regulations will also be instrumental in supporting the effective implementation of the "Andhra Pradesh Integrated Clean Energy Policy, 2024," which, among other things, is anticipated to facilitate creation of an energy storage market in the State to integrate more renewable energy into the grid and offer grid support services, such as peak reduction, curtailment management, contribution to reliability needs, transmission deferrals, intraday and seasonal variation management and to develop AP as a storage capital and clean energy hub in the country and the preferred destination for clean energy innovative projects.

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Draft Guidelines issued by MNRE to simplify testing of solar modules by labs

The Ministry of New and Renewable Energy (MNRE) vide an office memorandum dated May 27, 2025, issued the draft guidelines for series approval of SPV Modules for conducting testing in Test Labs for implementation of "Solar Systems, Devices and Components Goods Order, 2025 ("Guidelines").

The Guidelines are issued to facilitate labs/manufacturers in formation of series of products for approval of product family including change in design, materials, etc. for performance testing of SPV Modules in test labs for compulsory registration with BIS for implementation of the Solar Systems, Devices and Components Goods Order, 2025.

One of the key features of these Guidelines is the introduction of definitions of "Product Family", which has been defined as "A product family can be defined by the maximum configuration of components/subassemblies plus a description of how the models are constructed from the maximum configuration using these component and sub-assemblies. All models which are included in the family typically have common design, construction, parts or assemblies essential to ensure conformity with applicable requirements."

The Regulations set out the detailed requirements to be followed for quantitative selection of samples for testing. The Regulations also set out the retesting guidelines which inter-alia state that in case of any changes in the PV module or process modifications to maintain the certification, retesting is required. The manufacturer shall have the responsibility of disclosing changes in the design, materials, components, material combinations, manufacturers or processing of the PV module type family from the last tested version. Such changes may require a repetition of some or all the qualification tests to maintain type and safety approval.

DLL Analysis - The Guidelines let labs and manufacturers test and certify groups of similar solar modules (called a "product family") together rather than having to test every individual model separately. This means less time and cost for getting new products approved. Instead of testing every single module, only a sample of modules from different power classes within the family needs to be tested. This is both time and resource saving. By grouping modules with similar characteristics, the Guidelines help ensure consistent performance and safety across product ranges. This also ensures compliance with the registration requirements mandated by the Bureau of Indian Standards. By allowing easier approval of new versions and improvements within a product family, the Guidelines encourage innovation while maintaining strict quality control.

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Power Ministry Issues Draft Guidelines for designating a Company as REIAs

The Ministry of Power (NRE) section on February 11, 2025, issued the draft guidelines for designating a company as Renewable Energy lmplementing Agency (REIA) ("Guidelines"). The Guidelines have been issued pursuant to the Tariff-Based Competitive Bidding Guidelines (TBCB) for procuring power from grid-connected renewable energy projects. The TBCB guidelines, inter- alia, provide for an 'lntermediary Procurer' (lP), who acts as a trader, aggregating power from various generators and selling it to 'End Procurer(s)'. For carrying out activities of lPs, Central Government designates certain entities as RE implementing Agency (REIA).

These Guidelines stipulate that the applicant company seeking designation as the REIA should possess a valid Category-l electricity trading license as issued by the Central Commission. Additionally, such company must demonstrate net worth (a) comprising subscribed capital and reserves (excluding revaluation reserve), exceeding Rs 500 crore, and (b) Long-term credit rating of A or above. The applicant company shall require the approval of its board of directors for its designation as a REIA. Such company shall be designated as REIA for a period of 5 (five) years at a time, subject to termination by Central Government.

Central Government reserves the right to terminate the REIA designation of a company before a period of 5 (five) years if such company does not perform its duties as per the relevant rules, orders or guidelines issued by the Central Government.

These Guidelines shall be applicable for designating REIAs after the date of issuance. Organizations namely SECI Ltd., NTPC Ltd, NHPC Ltd., and SJVN Ltd., which are already designated as REIAs shall continue as REIAs as per the earlier orders of the Central Government.

DLL Analysis - These Guidelines help set clear rules for identifying REIAs. By focusing on fairness and transparency, the Guidelines reduce the chance of unfair or non-competitive decisions and increase trust among investors. The provisions set out in the Guidelines ensure that, only strong and reliable companies become REIAs by setting strict financial standards and requiring approval from their board of directors. This helps lower the risk of companies defaulting, as only those that are both financially and operationally stable are allowed to act as REIAs.

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Heavy Industries Ministry Issues Guidelines for Electric Car Manufacturing

The Ministry of Heavy Industries (MHI) on June 2, 2025, issued detailed guidelines pursuant to the 'Scheme to Promote Manufacturing of Electric Passenger Cars in India' ("Guidelines"). MHI had earlier issued this Scheme vide notification dated March 15, 2024. The Scheme is aimed at attracting investments from global EV manufacturers and promote India as a manufacturing destination for e-vehicles. The Scheme will also help put India on the global map for manufacturing of EVs, generate employment and achieve the goal of "Make in India".

Key features of these Guidelines are as follows –

• The approved applicants will be allowed to import Completely Built-in Units (CBUs) of e-4W with a minimum CIF value of USD 35,000 at reduced customs duty of 15% for a period of 5 (five) years from the application approval date.
• Approved applicants would be required to make minimum investment of Rs. 4,150 crore in line with the provisions of the Scheme.
• Minimum domestic value addition (DVA) of 25% to be achieved within 3 (three) years and minimum DVA of 50% to be achieved within 5 (five) years from date of issuance of approval letter by MHI/ PMA
• The Applicant's commitment to setup manufacturing facility(ies), achievement of DVA and compliance with conditions stipulated under the Scheme shall be backed by a Bank Guarantee from a scheduled commercial bank in India equivalent to the total duty to be forgone, or Rs 4,150 crore, whichever is higher, during the scheme period. The Bank Guarantee should be valid at all times during the tenure of the Scheme.

DLL Analysis - This forward-looking initiative supports India's pledge to reach net-zero emissions by 2070, while advancing sustainable transportation, fostering economic development, and minimizing environmental harm. It offers a supportive policy framework that encourages both domestic and international companies to build long-term manufacturing capabilities in the country. The initiative adopts a balanced approach by providing targeted customs duty incentives and setting clear DVA benchmarks, supporting the integration of advanced EV technologies while reinforcing India's local manufacturing base. By enforcing DVA targets, the scheme further bolsters the 'Make in India' and 'Aatmanirbhar Bharat' agendas, empowering global and Indian firms alike to contribute meaningfully to India's green mobility transition.

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CERC issues draft guidelines for the framework on virtual power purchase agreements

The Central Electricity Regulatory Commission ("CERC"), on May 22, 2025, has released draft guidelines for Virtual Power Purchase Agreements ("VPPAs") ("VPPA Guidelines"), which aims to assist and support designated consumers meet their Renewable Energy Consumption Obligation ("RCO") targets.

As per VPPA Guidelines, a consumer or a designated consumer may enter into a long-term bilateral VPPAs with a Renewable Energy ("RE") generator, directly or through a trader or by listing on an OTC Platform granted registration by CERC on mutually agreed terms and conditions, at a mutually agreed price also known as VPPA price, including the mutual agreement on the difference between the market price and VPPA price. However, the project should be registered in accordance with the Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022.

Under such an arrangement, if the RE generator sells electricity components through power exchanges (in DAM and/or RTM market segments) or any other authorized mode under the Electricity Act 2003, then the Renewable Energy Certificates ("RECs") received thereby are directly transferred to the consumer or designated consumer who can use such RECs for RCO compliance or for claiming green attributes. As per the VPPA Guidelines, the RE capacity contracted through VPPA shall only be eligible for issuance of RECs upon registering in accordance with and in terms of the eligibility conditions specified in the REC Regulations. It is also clarified that such RECs are not to be traded in any platform or otherwise. Such VPPA contracts are non-tradable and non-transferable, and the contracting parties are bound by the same for the entire term of the contract. The VPPA Guidelines also makes it mandatory for the consumer or designated consumer to communicate to the REC Registry on receipt of the RECs, and upon which the REC Registry shall extinguish such certificates.

This framework builds on India's evolving power market regulations, resolving previous jurisdictional uncertainties about financial energy contracts. Once finalized, it will provide much-needed structure for corporate renewable procurement through virtual agreements, supporting India's 500GW clean energy goals while giving businesses flexible options to meet sustainability targets.

DLL Analysis - India's draft VPPA Guidelines mark a significant step towards enabling corporates in renewable energy adoption practices by creating a clear framework for virtual clean energy contracts. By legally recognizing these financial agreements as price-hedging tools rather than physical power contracts, these guidelines help companies meet sustainability targets while providing revenue certainty for RE generators. This balanced approach - developed after resolving long-standing regulatory uncertainties - supports India's energy transition by making clean power procurement accessible to businesses without overburdening the physical grid infrastructure. This can be a called a progressive move as these guidelines encourage RE generators to sell actual energy generated on power exchanges and the same in turn shall deepen market transparency and liquidity.

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Power Ministry announces 100% waiver of ISTS charges for Hydro PSPs and Co-located BESS

On June 10, 2025, the Ministry of Power notified an order in continuation of previous orders regarding to waiver on Inter-State Transmission System ("ISTS") charges for transmission of electricity generated from RE sources and Energy Storage Systems. This order partially amended the relaxations previously provided for Hydro PSP projects and Battery Energy Storage Systems ("BESS") projects. As per this order, Hydro PSPs awarded for construction on or before June 30, 2028, are eligible for a complete waiver of ISTS charges. Similarly, co-located BESS projects commissioned on or prior to June 30, 2028, shall be eligible for waiver of ISTS charges only if power from such BESS project is consumed outside the state of its commission. It is also clarified that BESS project is considered as co-located, if the BESS project and RE project are connected at the same ISTS substation.

Further, the order also mentions that Hydro PSPs projects with construction works awarded after June 30, 2028, or BESS units commissioned after June 30, 2028, are not eligible for the ISTS charges waiver. It is clarified that for BESS projects that are not co-located, the existing waivers under prior order and CERC regulations shall continue to apply.

This move aims to encourage investment in energy storage, which is crucial for balancing the grid as renewable energy adoption grows. The decision is part of a broader effort to integrate more renewable energy into the grid while ensuring stability.

DLL Analysis - The Power Ministry's waiver of ISTS charges for the identified projects strategically enhances renewable energy integration and grid stability. This order also is a welcome move for potential investors as BESS projects and Hydro PSP projects can be consider cost-effective and competitive. The incentive provided herein will help reduce losses, ensure better grid efficiency and mainly help India meet its Energy Saving Obligation. Additionally, this order aims to stimulate investments in energy storage by reducing costs for developers and boosts green energy trade. This incentive may significantly impact the sector if complemented by robust financing mechanisms and enhances project bankability.

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Centre approves Rs. 5400 crore VGF scheme for battery storage projects in second tranche

Ministry of Power vide its notification dated June 09, 2025, approved an amount for Rs. 5400 crore Viability Gap Funding ("VGF") scheme for development of BESS supported through Power System Development Fund ("PSDF") ("Scheme"). The VGF support envisaged in this Scheme is in relation to a total capacity of 30 GWh of BESS wherein 25 GWh is allocated across 15 states and the remaining 5 GWh is designated for NTPC towards development of optimum utilization of existing thermal generation and transmission infrastructure and also to facilitate meeting non-solar hour electricity demand in an effective manner.

As per this Scheme, eligible projects are entitled to VGF support and the same is fixed at Rs. 18 lakh per MWh. Key operational mandates include execution of power purchase agreements within 9 months from the issuance of this Scheme and commissioning projects within 18 months from the date of signing the Battery Energy Storage Purchase Agreement or power purchase agreement. Proposals from states for availing the VGF must be submitted within 60 days from the issuance of this Scheme. VGF will be disbursed in three tranches: 20% at financial closure, 50% at Commercial Operation Date ("COD"), and 30% after 1 year from COD.

The scheme requires BESS capacity to be at least 2 hours of continuous discharge and average 1.5 charge/discharge cycles per day. Projects will be awarded through tariff-based competitive bidding under a Build Own Operate (BOO) or Build Own Operate Transfer (BOOT) model, with PPA tenures ranging between 12 and 15 years.

This financial support aims to make battery storage projects more economically feasible for developers, helping India integrate more renewable energy into its grid. The VGF initiative is part of India's push to achieve 500 GW of renewable energy capacity by 2030 while addressing the intermittency of solar and wind power.

DLL Analysis - This second tranche of the VGF scheme is a strategic and well-structured intervention by the government to fast-track energy storage deployment. This Scheme may significantly accentuate the energy storage ecosystem in India. This Scheme also encourages scaling of battery storage deployment at scale and establishes competitive tariffs in the grid-energy storage sector. Further, this Scheme demonstrates India's next steps towards catalyzing the BESS manufacturing ecosystem by mandating a transparent bidding framework, defined timelines and contractual certainty.

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CERC amends transmission charge sharing regulations to strengthen renewable, hydro and energy storage projects

The Central Electricity Regulatory Commission ("CERC"), on June 26, 2025, issued the fourth Amendment to the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020 ("Amendment"), aimed at promoting RE, energy storage systems ("ESS"), and green hydrogen/ ammonia initiatives.

Amongst other changes or additions notified, the Amendment provides 100% waiver on transmission charge for RE projects (solar, wind, hybrid) commissioned on or before June 30, 2025. Similarly, for Battery ESS (BESS) and Hydro PSP ESS, for which construction works has been awarded before June 30, 2028, are eligible to receive 100% waiver for a period up to 12 years and 25 years from COD, respectively. The Amendment also introduces 100% waivers for offshore wind and green hydrogen/ammonia plants, with declining benefits dependent on the period of COD. It is to be noted that all waivers set out in the Amendment are dependent on the period of COD and nature of the project, and are declining in terms of benefits, which may more fully be stated as decline in % (percentage) of waiver depending on the year the project achieves COD.

DLL Analysis - This Amendment represents a significant policy shift toward bolstering India's clean energy infrastructure. By providing long-term transmission charge waivers and including newer energy ecosystems and sources such as BESS, offshore wind, and green hydrogen, the CERC has reinforced financial viability for upcoming projects. This regulatory flexibility, coupled with financial certainty, is crucial for accelerating the deployment of RE and storage capacity aligned with India's 2030 clean energy goals. Further, this Amendment incentivizes achievement of COD in the identified RE projects or otherwise and ties all waiver conditions to the same. This is a progressive move towards projects achieving agreed and approved timelines as all waivers decline in a phased manner.

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MNRE clarifies applicability of ALMM for behind-the-meter solar projects

On July 10, 2025, the Ministry of New and Renewable Energy ("MNRE") issued a significant clarification regarding the applicability of the Approved List of Models and Manufacturers ("ALMM") for solar PV projects, specifically addressing behind-the-meter installations by government bodies and public sector undertakings ("PSUs").

While government solar projects have been subject to ALMM requirements since January 02, 2019, further net-metering and open access projects were brought under the ambit of ALMM vide amendments notified in 2022. An earlier clarification dated October 07, 2022, excluded behind-the-meter solar power plants, intended for captive consumption or group captive use, from the ALMM compliance mandate. Further, MNRE vide its notification dated May 16, 2025, clarified that behind-the-meter solar projects for captive consumption by government bodies and PSUs are not exempt from ALMM.

MNRE has clarified that behind-the-meter solar PV projects meant for captive use by government entities or PSUs, if commissioned prior to June 01, 2026, must use solar PV modules enlisted under ALMM, though the use of ALMM-listed PV cells. All projects initiated from June 01, 2026, are required to adhere strictly to ALMM standards, utilizing both the enlisted solar PV modules and cells.

DLL Analysis - This clarification, approved by the MNRE provides regulatory certainty and supports India's objective of ensuring quality and reliability in publicly supported renewable energy deployments. The applicability of ALMM also helps the government entities and PSUs to plan procurements efficiently and shift significant pressure to the domestic manufacture of solar PV modules and cells. This clarification also creates new opportunities as government entities and PSUs may now float tenders particularly for procurement and deployment contracts for the ALMM mandate.

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MoPNG issues revised guidelines for providing financial assistance to CBG Producers for BAM

The Ministry of Petroleum and Natural Gas, on July 08, 2025, released revised scheme guidelines for providing financial assistance to Compressed Biogas ("CBG") producers, in order to support biomass collection for the first 100 biomass-based CBG plants by providing assistance for procurement of Biomass Aggregation Machinery ("BAM"). The main objective of these guidelines is to facilitate biomass aggregation and marketing, to prevent the burning of surplus biomass and to generate additional income for the farmers. The key revisions inter alia are as follows:

• Financial assistance provided under these guidelines are dependent on the production capacity, in the following manner:
  • CBG plants with a minimum production capacity of 2 tons per day (TPD) and utilizing a minimum of 50% biomass as feedstock are eligible for a subsidy of up to INR 90 Lakhs.
  • CBG Plants utilizing less than 50% biomass as feedstock but consuming over 3,000 metric tonnes of Biomass annually may also qualify for the same level of assistance, which is INR 90 Lakhs for every 3,000 metric tonnes utilized.
• The above mentioned eligibility criterion is further subject to other conditions, including the installation or proposed CBG production capacity of a minimum of 2 TPD, no other benefits, subsidy or assistance has been availed on the machinery/equipment to be procured under these guidelines from other central or state government schemes.
• The maximum financial assistance will cover up to 50% of the cost of BAM, subject to the INR 90 Lakhs limit per set (whichever is lesser). However, the maximum financial assistance will be Rs 9 crore per project on a pro-rata basis.
• Applicants must detail the aggregation machinery proposed and demonstrate alignment with their biomass procurement plans.
• The CBG producer is also required to sign a 5 year bond of amount equal to the financial assistance undertaking that the BAM procured hereunder shall primarily be for collection/ transportation of biomass for CBG production and that BAM will not be sold, transferred, hypothecated, mortgaged or disposed of in any manner until the completion of 5 years from the date of such purchase.

DLL Analysis - The current practice of burning biomass is a huge contributor to an increase in pollution during winter seasons, more specifically. The government revised the existing guidelines to as the situation requires the deployment of biomass collection equipment and leverage the same for production of CBG. Additionally, this would in turn extract economic value from untapped biomass resources by converting it into CBG and bio-manure and thereby creating a new market for transaction of such products. The mentioned guidelines are a strategic move to boost CBG production by improving biomass sourcing and supporting aggregation infrastructure. By linking subsidy eligibility to project scale, biomass usage, and construction progress, the government tries to ensure accountability of the CBG producers. These revised provisions are aligned with the Government of India's broader initiatives to encourage clean energy, reduce dependence on fossil fuels, and streamline regulatory processes in the bio-energy sector. The move complements ongoing reforms under the National Biomass Programme and aims to extract economic value from untapped biomass resources by turning them into CBG.

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CEA introduces guidelines for installation of automatic weather stations for solar and wind power plants

The CEA, on July 07, 2025, released comprehensive guidelines for installation of Automatic Weather Stations ("AWS") at solar and wind power plants ("AWS Guidelines") to enhance weather data accuracy and grid reliability for improved forecasting and efficient RE generation across the country. These guidelines are also aimed at achievement of accurate, real-time measurement of weather to enable optimization of RE generation, mainly in solar and wind projects.

The AWS Guidelines mandate for the installation of an AWS in every RE project site wherein at least 1 AWS needs to be installed for projects with 50 MW and above RE capacity or any capacity in accordance with the state electricity commission norms, connected at infra state network and ISTS connected RE plants shall be governed by CERC norms. Primarily, the AWS Guidelines detail optimal site selection, chain link fencing standards, mast specification for AWS, rain gauge specifications, sensor installation, power supply configuration, earthing, data acquisition system and cyber security measures, etc.

Essential parameters to be monitored comprise wind speed and direction, ambient temperature, humidity levels, solar irradiance, rainfall, and barometric pressure. These data points will feed into models used for generation forecasting and grid balancing, enhancing both reliability and regulatory compliance. The AWS will operate autonomously with solar-powered systems and maintenance-free batteries to ensure uninterrupted function even in adverse weather conditions. Data collected is required to be encrypted, quality-checked in real-time, and transmitted securely to the National Centre for Medium Range Weather Forecasting (NCMRWF) and IMD, while also integrating with local plant SCADA systems.

DLL Analysis - The AWS Guidelines are designed to standardize the setup and functioning of AWS at solar and wind power project sites, ensuring the collection of precise, real-time weather information. By mandating site-specific configurations, robust sensor standards, and secure data acquisition and transmission systems, the guidelines significantly enhance the predictability and efficiency of RE generation. The data collected through AWS is crucial for forecasting generation and will also help the grid operators gauge and manage variability in generation of RE from such projects. By standardizing AWS installation and operation, CEA is ensuring higher reliability of weather-dependent RE outputs, which will improve power scheduling, reduce curtailment, and enhance grid stability. The inclusion of robust cybersecurity protocols, encrypted data storage, real-time quality control, and interoperability with SCADA and national forecasting centers is reflective of a progressive approach that aligns with global best practices in smart energy management.

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Government launches ADEETIE Scheme to boost energy efficiency in MSMEs

The Ministry of Power, Government of India on July 15, 2025, launched the Assistance in Deploying Energy Efficient Technologies in Industries & Establishments ("ADEETIE") scheme, with a total budgetary outlay of Rs. 1000 crore. The initiative is designed to accelerate the adoption of energy-efficient technologies across Micro, Small, and Medium Enterprises ("MSMEs") by providing both financial incentives and technical support.

Key features of the scheme include:

• The scheme envisages to provide 5% interest subvention for micro/small enterprises and 3% for medium enterprises, as well as technical support like energy audits and project reports like support for Investment Grade Energy Audits and the preparation of Detailed Project Reports (DPRs).
• The scheme will be implemented by the Bureau of Energy Efficiency ("BEE") and shall cover 14 energy-intensive sectors including textiles, steel re-rolling, bricks, glass and food processing.
• The first phase of the scheme will target 60 industrial clusters, with plans to expand to 100 more in the second phase. The scheme further aims to reduce energy consumption by 30-50% and boost competitiveness.
• The total budget of ADEETIE includes Rs. 875 crore for interest subvention, Rs. 50 crore for Investment Grade Energy Audit support, and Rs.75 crore for handling support through BEE. The scheme expects to catalyze Rs. 9000 crore in investments.
• A dedicated portal (adeetie.beeindia.gov.in) has been launched to streamline financing and application processes.

DLL Analysis - The ADEETIE scheme represents a strategic push by India to modernize its MSME sector while advancing climate goals, offering financial incentives and technical support to drive energy efficiency. By combining interest subvention with targeted technical assistance, including energy audits and DPRs, the scheme directly addresses key barriers faced by small industries in deploying energy-efficient solutions. Prioritizing high-energy-consuming clusters ensures optimal impact and improved competitiveness for MSMEs. The initiative aligns with India's push for a low-carbon economy, focusing on industrial energy efficiency to reduce emissions, cut operating costs and lessen fossil fuel dependence.

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India launches first-ever E-truck Incentive Scheme under PM E-Drive

The Ministry of Heavy Industries ("MHI") on July 11, 2025, launched India's first dedicated electric truck incentive scheme as part of the PM E-DRIVE initiative. The scheme aims to accelerate the country's transition to clean, efficient, and sustainable freight mobility by subsidizing electric trucks in the N2 category (3.5–12 tonnes Gross Vehicle Weight) and N3 category (above 12 tonnes up to 55 tonnes GVW).

Key features of the scheme include:

• Up to Rs. 9.6 lakhs per vehicle offered as an upfront price discount, reimbursed to Original Equipment Manufacturers (OEMs) via the PM E-DRIVE portal on a first-come, first-served basis.
• The scheme aims to benefit approximately 5,600 e-trucks, including a dedicated allocation for 1,100 vehicles in Delhi, in recognition of the region's severe air quality challenges.
• Notably, Steel Authority of India Limited (SAIL) has pledged procurement of 150 e-trucks, aligning with the Atmanirbhar Bharat vision.
• Only trucks that replace older, polluting trucks (with valid scrapping certificates) will be eligible, encouraging fast fleet modernization.
• The scheme mandates a comprehensive manufacturer-backed warranty- 5 years or 5 lakh km for batteries, and 5 years or 2.5 lakh km for the vehicle and motor, to enhance reliability and consumer confidence.

DLL Analysis - India's new e-truck incentive framework marks a strategic push to decarbonize freight transport, a segment responsible for 42% of transport emissions despite comprising only 3% of total vehicles. By offering substantial incentives coupled with mandatory scrappage of old trucks, the policy addresses cost barriers for operators and air quality concerns, while boosting domestic EV manufacturing under the Make in India campaign. This initiative underscores India's growing commitment to green mobility and industrial decarbonization.

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KERC introduces Intra-State Deviation Settlement Mechanism Regulations, 2025

The Karnataka Electricity Regulatory Commission ("KERC") on July 15, 2025, notified the Intra-State Deviation Settlement Mechanism ("DSM") Regulations, 2025, introducing a comprehensive framework to strengthen scheduling discipline and enhance grid reliability in Karnataka. The updated regulations aim to align the state's power sector operation with national guidelines and facilitate the adoption of market-based operations.

Key features of these regulations include:

• The DSM framework applies to all grid-connected entities, open access consumers, renewable and conventional generators, and distribution licensees, mandating strict compliance with their declared energy schedules.
• Deviations from scheduled drawl or injection will attract charges, calculated on a 15-minute block basis.
• The regulations introduce a market-reflective "Normal Rate" (NR) for deviation settlement. The NR is derived from a composite price signal based on the Integrated Day-Ahead Market (DAM), Real-Time Market (RTM), and ancillary service costs, promoting efficiency and cost-reflectiveness.
• In cases of multiple sources of power (e.g., open access and licensee supply), any deviation is first set off against the scheduled open access quantum before being attributed to the local distribution licensee supply.
• The State Load Dispatch Centre (SLDC) will issue monthly DSM bills, with payments transacted through a centralized State Deviation Pool Account. Interest is payable on delayed payments, and persistent defaulters are required to furnish Letters of Credit (LCs) to ensure payment security.

DLL Analysis - KERC's DSM Regulations, 2025 is a significant regulatory advance for Karnataka's power sector. By enforcing market-aligned pricing for grid deviations and instituting strong enforcement mechanisms, the regulations are poised to drive greater scheduling discipline, reduce grid imbalances, and foster a more competitive, reliable and efficient power ecosystem in Karnataka. Stakeholders, including open access consumers, generators, and licensees are now subject to more transparent, predictable, and market-responsive deviation charges, increasing accountability and operational efficiency.

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Draft Petroleum and Natural Gas Rules 2025.

The Ministry of Petroleum and Natural Gas, on July 9, 2025, issued the notification regarding the Draft Petroleum and Natural Gas Rules, 2025 ("Draft Rules"), inviting stakeholder feedback, with an aim to modernize India's upstream oil and gas framework by promoting exploration and production, enhancing ease of doing business, and ensuring environmental sustainability.

A key highlight of the Draft Rules is the introduction of an investor friendly stabilization clause that is designed to protect lessee and licensee from adverse impacts of future legal or fiscal changes like increases in taxes, royalties or other levies by allowing the lessee or licensee to be placed in the same financial condition in which he had been before implementation of such change.

Key features of the Draft Rules include:

• The Central Government may prospect for and produce mineral oils within India's territory, including its territorial waters, exclusive economic zone (EEZ), and continental shelf, under the Maritime Zones Act, 1976.
• Authorization for such mineral oil operations may be granted via lease, contract, or government order. Joint ventures and partnerships with existing lessees or contractors are permitted.
• Lessees must allow access to infrastructure over any land which is comprised or adjoins the land held by the lessees, to other existing and future licence or lease holders, without material interference.
• Disputes over damages or losses to the lessee due to land access to others may be settled through mutual agreement or, failing that, by a government-appointed committee (with state government representation, where applicable).
• Where hydrocarbon reservoirs extend beyond a lease area, lessees must promptly notify authorities. In such cases, lessees may apply for expanded lease rights, particularly if the adjoining area is unallocated.
• Applications must be submitted to the Central and relevant State Governments, along with prescribed documents, a Rs. 25 lakh security deposit, and a non-refundable Rs. 2.5 lakh fee.
• Lease durations range from 4 to 30 years, extendable in successive terms (not exceeding 30 years each), subject to development milestones and plan approvals.
• Lessees will enjoy exclusive rights over exploration, production, infrastructure development, decarbonization, and integrated energy projects within the lease area.
• Annual dead rent and land usage declarations are mandatory, with penalties for misrepresentation or non-compliance.
• Royalty payments are to be made monthly, based on the volume of mineral oil produced, with certain exemptions (e.g., self-consumption, process loss).
• In case of common reservoirs across multiple lease areas, joint development is encouraged. If mutual agreement fails, the Government may prescribe process for such agreement. In the event any licensee, lessee or contractor does not agree to the prescribed process, they may relinquish the area granted to them for the operations.
• The Government will maintain and regularly update a digital repository of areas available for lease, including those under Expression of Interest (EoI) or competitive bidding.
• Lessees/contractors are required to submit a site restoration plan within three years of production commencement (or within 12 months of these Rules coming into force), with updates every three years or as directed.
• A dedicated site restoration fund must be established and regularly funded by the lessee to meet restoration and abandonment obligations at the end of project life.

DLL Analysis - The Draft Rules represent a major update to India's upstream legal framework, striking a balance between investor protection, operational flexibility, and regulatory oversight. The stabilization clause stands out as a clear reassurance for long-term investment, while expansion of joint operations and environmental protections illustrate the sector's move toward global best practices. However, the absence of carbon credit mechanisms (as used in jurisdictions like Canada) or robust penalty regimes for flaring may limit India's attractiveness in the global energy transition and green finance space. The introduction of site restoration and decarbonization provisions is a positive step but would benefit from clearer decommissioning frameworks and third-party ESG verification.

While the final implementation may undergo changes based on stakeholder input, the present draft reflects a strong push for regulatory certainty, transparency and environmental sustainability, critical for attracting both domestic and foreign investment into India's energy sector.

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