INTRODUCTION
In this edition of our Energy & Infrastructure Newsletter, we bring to you key legal and regulatory developments from June 2025. In a significant achievement, India met its target of installing 50% of its power generation capacity from non-fossil fuel sources, five years ahead of schedule. This milestone is expected to enhance national energy security and contribute meaningfully to India's 2070 net-zero commitments.
To promote grid-scale battery storage, new guidelines for viability gap funding have been notified, offering financial support for 30 GWh of battery energy storage systems. Further, revised eligibility norms for availing waivers on inter-state transmission system charges have been introduced.
India's carbon market is in its early stages of development. Recently, the Draft Greenhouse Gases Emission Intensity Target Rules, 2025 have been published, setting sector-specific targets under the Carbon Credit Trading Scheme, 2023.
In a separate development, amendments to the Power Market Regulations, 2021, formally recognising virtual power purchase agreements and expanding over-the-counter trading mechanisms have also been proposed.
On the financing front, the Reserve Bank of India issued the Project Finance Directions, 2025, establishing a harmonised framework for financing infrastructure and non-infrastructure projects, and clarifying the treatment of delayed commercial operations.
Additionally, a new asset monetisation strategy has been released for the road sector, outlining a medium-term framework to unlock value from operational highway assets through transparent, standardised, and risk-managed processes, with a focus on the toll-operate-transfer and infrastructure investment trust models.
This edition also covers several other noteworthy updates and insights from the Indian energy and infrastructure sector — we invite you to explore these key developments in the pages that follow.
MINISTRY OF POWER (MoP)
Draft amendments proposed to Rule 18 of Electricity Rules, 2005
On June 11, 2025, the MoP published the Draft Electricity (Amendment) Rules, 2025, proposing amendments to Rule 18 of the Electricity Rules, 2005 which recognises energy storage systems as part of the power system.
The proposed amendment to Rule 18 explicitly recognises consumers' rights to:
- Develop, own, and operate energy storage systems; and
- Purchase, lease, or rent storage space from any developer or owner of an energy storage system.
Amendment to the Standard Bidding Documents for procurement of Inter-State Transmission Services
On June 5, 2025, the MoP published amendments to the standard bidding documents for procurement of inter-state transmission services through tariff-based competitive bidding (TBCB).
The amendments expand the definition of Bid Bond1 to include:
- Insurance Surety Bonds issued by insurance companies authorized by the Insurance Regulatory and Development Authority of India; and
- Payment on Order Instruments issued by the Indian Renewable Energy Development Agency, Power Finance Corporation Limited, or REC Limited.
These instruments can now be furnished as alternative security for participating in bids for transmission projects developed under the TBCB framework pursuant to Section 63 of the Electricity Act, 2003 (Electricity Act).
Additionally, the requirement for the Contract Performance Guarantee2 - previously computed at 3% of the aggregate capital cost or aggregate payments for projects pursuant to requests for proposals issued before December 31, 2021—has been revised. A uniform Contract Performance Guarantee is now prescribed at 5% of the aggregate capital cost or aggregate payments for project.
Operational Guidelines for Designating a Company as Renewable Energy Implementing Agency
On June 9, 2025, the MoP issued Guidelines for Designating a Company as a Renewable Energy Implementing Agency (REIA).
To accelerate the development of renewable energy (RE), the MoP had earlier issued TBCB Guidelines for procuring power from grid-connected RE projects - including solar photovoltaics, wind, wind-solar hybrids (with or without energy storage systems), and standalone energy storage systems. The TBCB Guidelines provide for an Intermediary Procurer (IP), who acts as a trader by aggregating power from multiple generators and supplying it to end procurers.
For undertaking the activities of IPs, the Central Government designates certain entities as REIAs. As market makers, REIAs are responsible for conducting the RE project bidding process, executing back-to-back power sale agreements with RE developers and power purchase agreements with distribution licensees or consumers, and ensuring payment security for RE developers.
NHPC Limited, NTPC Limited, SJVN Limited, and Solar Energy Corporation of India Limited, have already been designated as REIAs under previous orders of the Central Government.
Guidelines for Viability Gap Funding Scheme for development of Battery Energy Storage Systems published (VGF Guidelines)
Notified on June 9, 2025, the VGF Guidelines aim to support the deployment of 30 GWh of Battery Energy Storage System (BESS) capacity by providing VGF of ₹18 lakh per MWh, backed by an allocation of ₹5,400 crore from the Power System Development Fund.
State utilities, or agencies authorized by State or Central Governments, are eligible to participate. The projects must be commissioned within 18 months from the date of signing the battery energy storage purchase agreements or power purchase agreements, awarded through the TBCB process under Section 63 of the Electricity Act.
MINISTRY OF NEW AND RENEWABLE ENERGY (MNRE)
MNRE revises guidelines for the Waste-to-Energy Programme under the National Bioenergy Programme
On June 27, 2025, the MNRE published revisions to the Waste-to-Energy (W2E) Guidelines. The W2E Guidelines were introduced to promote the generation of biogas, bio-CNG, power, producer gas, or syngas from urban, industrial, and agricultural wastes and residues. To simplify implementation, several amendments have now been introduced.
The conditions for successful commissioning of W2E plants have been updated to require operation for at least 3 consecutive months, including continuous operation for at least 24 hours (earlier 72 hours), at an average of 80% of the rated capacity.
Under the revised framework, 50% of the Central Financial Assistance (CFA) will be released after the plant obtains a Consent to Operate certificate from the State Pollution Control Board, supported by a bank guarantee. The remaining CFA will be disbursed upon achieving 80% of the rated capacity or the maximum eligible capacity, whichever is lower. If a plant achieves less than 80% output, the CFA will be disbursed on a pro-rata basis, but no CFA will be granted if the Plant Load Factor falls below 50%.
The inspection process has also been revised to mandate joint inspections led by the Sardar Swaran Singh National Institute of Bio-Energy, along with the concerned State Nodal Agency for Renewable Energy, or the Biogas Technology Development Center, or any empanelled agency.
Project developers must claim the CFA within 18 months from either the date of commissioning or the date of in-principle approval, whichever is later.
MNRE revises guidelines for the Biomass Programme under the National Bioenergy Programme
On June 27, 2025, the MNRE published revisions to the Guidelines for the Biomass Programme (Revised Guidelines) under Phase I of the National Bioenergy Programme (FY 2021–22 to 2025–26), originally notified on November 2, 2022.
Under the revised guidelines, the documentation requirements for obtaining in-principle approvals for briquette and pellet manufacturing plants have been relaxed.
Further, the earlier requirements for submitting copies of contract agreements for the sale of briquettes/pellets for a minimum period of 2 years, and details of the SCA/remote monitoring system installed at the plant, for release of CFA, have been substituted. Developers must now submit:
- A copy of the offtake/sale agreement for briquettes/ pellets; and
- Either details of an IoT-based monitoring solution or an undertaking to share quarterly data on briquette/ pellet production.
Additionally, the requirement for developers to notify the implementing agency in advance before commissioning the plant has been removed.
The Revised Guidelines have also updated the performance inspection criteria, specifying that to qualify for 100% CFA, a plant must operate at an average of at least 80% of its rated capacity over a continuous 10-hour period. If this threshold is not met, the CFA will be disbursed on a pro-rata basis, proportionate to the actual output achieved. No CFA will be granted if the plant's capacity utilization factor falls below 50%.
These revisions apply to all projects sanctioned under the Biomass Component of the National Bioenergy Programme Phase I. All other provisions of the earlier guidelines remain unchanged.
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Footnotes
1. 'Bid Bond' means the unconditional and irrevocable bank guarantee required to be submitted by the bidder(s) along with their technical bid(s).
2. 'Contract Performance Guarantee' means the unconditional and irrevocable bank guarantee to be submitted by the selected bidder, on behalf of the transmission service provider, to the nodal agency within 10 days from the date of issuance of the letter of intent.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
