Projects, Energy & Infrastructure Monthly Newsletter – June 2026

Ministry of New and Renewable Energy issues Operational Guidelines for implementation of the Small Hydro Power Development Scheme for FY 2026-27 to FY 2030-31.

• The Ministry of New and Renewable Energy (“MNRE”), vide notification dated May 15, 2026, has issued the Operational Guidelines for implementation of the Small Hydro Power (“SHP”) Development Scheme for projects from 1 MW to 25 MW capacity for the period FY 2026-27 to FY 2030-31.
• The Scheme has been approved with a total financial outlay of Rs. 2,584.60 crore, including Rs. 2,532.60 crore towards Central Financial Assistance (“CFA”) for SHP projects, Rs. 30 crore for preparation of Detailed Project Reports (“DPRs”), Rs. 8 crore for support to technical institutions, and Rs. 14 crore for IEC activities, capacity building, international cooperation and Project Monitoring Unit. Solar Energy Corporation of India Limited (“SECI”) has been designated as the National Programme Implementing Agency for the Scheme.
• The key highlights of the Guidelines are as follows:
  • The Scheme aims to support installation of approximately 1,500 MW of new SHP capacity across India during FY 2026-27 to FY 2030-31, with special emphasis on hilly and North-Eastern States.
  • The Scheme is expected to avoid approximately 4.3 million tons of CO₂ emissions annually after commissioning of 1,500 MW SHP capacity.
  • SHP projects having an installed capacity of not less than 1 MW and up to 25 MW are eligible under the Scheme.
  • Eligible projects are required to be allotted through a transparent and competitive bidding process. However, where competitive bidding is attempted but does not result in successful outcomes, the project may be allotted to a government sector entity/department on nomination basis.
  • Applications under the Scheme are required to be submitted only through the online SHP portal. The applications will be verified by the concerned State Nodal Agency and thereafter scrutinised/recommended by SECI to MNRE for sanction.
  • The first instalment of CFA, being 50% of the eligible CFA, may be availed upon completion of 50% physical progress and 50% financial progress. The first instalment is optional and may also be claimed along with the final instalment.
  • The second/final instalment of CFA will be released upon completion of the project, achievement of Commercial Operation Date and achievement of a minimum 80% monthly generation for at least one calendar month within one year from COD.
  • The projects are required to be completed within 4 years from the date of start of construction, with a possible grace period of 1 year for justified delays. Delay beyond the prescribed timeline will result in reduction of CFA at 4% of the total eligible CFA for every quarter of delay. No CFA will be considered where COD is not achieved within 7 years from the date of start of construction.

MNRE rules out blanket extension of ALMM List-II deadline and allowed only project-specific exemptions

• The MNRE, vide Office Memorandum dated May 25, 2026, has clarified that no blanket extension of the deadline of June 01, 2026 deadline for mandatory sourcing of solar PV cells from ALMM List- II will be granted for Net-Metering projects and Open Access renewable energy projects.
• As per MNRE’s earlier framework, Net-Metering projects and Open Access renewable energy projects commissioned on or after June 01, 2026 are required to mandatorily source solar PV modules from ALMM List-I and solar PV cells from ALMM List-II.
• MNRE noted that it had received several representations seeking extension/non-extension of the aforesaid timeline. After consultations with industry representatives, including solar PV manufacturers and solar power developers, MNRE observed that policy stability is necessary to ensure long term investor confidence in the domestic solar PV manufacturing sector. At the same time, MNRE recognised that actual investments already made by RE developers also require protection on a case-by-case basis.
• The key highlights of the Office Memorandum are as follows:
  • MNRE has decided that no blanket extension of the ALMM deadline of June 01, 2026 will be granted. However, Net-Metering/Open Access RE power projects, where installation of solar modules is completed but the project has not been commissioned, or where effective steps have been taken by developers towards grounding the project, may be considered for appropriate time-extension on a case-to-case basis.
  • Such case-specific time-extension will be considered only after objective assessment of supporting information/documentary proof furnished by the concerned developers.
  • MNRE has classified eligible cases into two categories:
  • Category I: Solar PV modules installed on the project site, but project not commissioned before June 01, 2026.
  • Category II: Effective steps taken for grounding the project, but project not commissioned before June 01, 2026.
  • For Category I, the developer must establish that before June 01, 2026, 100% of the solar PV modules required for the project had been installed at the project site. The supporting document required is approval/certification from the office of the Electrical Inspectorate to the concerned Government on the DC side installations, including installation of solar PV modules.
  • For Category II, the developer is required to satisfy all prescribed conditions relating to land, financial closure, connectivity, approval of electrical drawings, and either arrival or partial installation of solar PV modules at the project site.
  • Under the land requirement, the developer must show that prior to June 01, 2026, it had clear possession of at least 75% of the land required for the project through registered ownership/lease or Government allotment letters.
  • The developer must also show that prior to June 01, 2026, the project had achieved financial closure and had received in-principle grant of connectivity, with the start date of connectivity being before June 01, 2026.
  • Further, prior to June 01, 2026, approval must have been obtained from the office of the Electrical Inspectorate for the electrical drawings, including Single Line Diagram, for the project.
  • In addition, the developer must satisfy either of the following solar PV module-related conditions:
    • before the date of the Office Memorandum, 100% of the solar PV modules required for the project had arrived at the project site; or
    • before June 01, 2026, more than 50% of the solar PV modules required for the project had been installed at the project site.
  • All claims/information are required to be submitted by interested RE power developers in the prescribed format on the portal developed by the National Institute of Solar Energy (“NISE”) by June 30, 2026.
  • The claims will be examined by an Expert Committee to be constituted by MNRE, which will recommend project-wise, case-to-case claims based on information submitted by the developers. Field inspections may also be undertaken by the Committee or any other agency as per operational necessity.

MNRE simplifies procedure for ALMM List-II exemption for eligible rooftop solar projects

• The MNRE, vide Office Memorandum dated June 15, 2026, has issued a clarification to its earlier Office Memorandum dated May 25, 2026 in relation to claiming exemption from the applicability of ALMM List-II for rooftop solar projects.
• MNRE noted that it had received several representations seeking a simplified procedure for claiming exemption from ALMM List-II in respect of rooftop solar PV power projects which had been installed before June 01, 2026, but could not be commissioned by the concerned DISCOM under the net-metering framework before June 01, 2026 due to valid reasons.
• The key highlights of the Office Memorandum are as follows:
  • Rooftop solar PV projects which had been installed before June 01, 2026, but could not be commissioned by the concerned DISCOM under the net metering framework before June 01, 2026 due to valid reasons, may apply for exemption from ALMM List-II through the designated portal.
  • For claiming such exemption, the developer or consumer is required to establish that before June 01, 2026, 100% of the solar PV modules required for the project had been installed at the project site.
  • The dispensation window will remain available only for one month from the date of issuance of the Office Memorandum, within which all such projects are required to be commissioned.
  • In case any project is delayed due to issues with the concerned DISCOM, the same is required to be recorded in writing while issuing the commissioning certificate.
  • MNRE has clarified that this relaxation is limited to addressing a transitional situation and shall not be treated as an extension of the effective date of June 01, 2026 for applicability of ALMM List-II for commissioning of net metering/open access renewable power projects.

Andhra Pradesh Electricity Regulatory Commission issues the Second Amendment to the Andhra Pradesh Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulation, 2025)

• The Andhra Pradesh Electricity Regulatory Commission (“APERC”), in exercise of its powers under Sections 61, 62, 86(1)(b) read with Section 181 of the Electricity Act, 2003 has notified the Second Amendment to the APERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulation, 2025 (“Second Amendment”) on May 21, 2026.
• The Second Amendment primarily removes the requirement for Renewable Hybrid Energy Projects to be connected at a single interconnection point, thereby permitting wind, solar and storage components to be connected at the same or different interconnection point(s).
• The key highlights of the amendment are as follows:
  • The definition of “Renewable hybrid energy project” has been amended to cover renewable energy projects generating electricity from a combination of renewable energy sources connected at the same or different interconnection point(s).
  • The definition of “Renewable energy with storage project” has also been amended to include renewable hybrid energy projects with storage connected at the same or different interconnection point(s).
  • For a renewable hybrid energy project, the rated capacity of one renewable energy source must be at least 25% of the rated power capacity of the other renewable energy source.
  • Energy may be injected at the same or different interconnection point(s), with metering to be undertaken at the respective interconnection point(s).
  • Each 1 MW of contracted Wind-Solar Hybrid Project is required to achieve a minimum Capacity Utilisation Factor (“CUF”) of 40%.
  • APERC will determine project-specific CUF for renewable hybrid energy projects, considering the proportion of rated capacity of each renewable energy source and the applicable CUF for such sources.

Rajasthan Electricity Regulatory Commission has notified the RERC (Demand Flexibility (DF)/Demand Side Management (DSM)) Regulations, 2026

• The Rajasthan Electricity Regulatory Commission (RERC), in exercise of its powers under Sections 3, 61, 66, 86 and 181 of the Electricity Act, 2003, has notified the Rajasthan Electricity Regulatory Commission (Demand Flexibility (DF)/Demand Side Management (DSM)) Regulations, 2026 (Regulations). The Regulations have been published in the Rajasthan Gazette dated June 15, 2026 and shall come into force from the date of their publication. However, the Demand Flexibility Portfolio Obligation (DFPO) under Regulation 3.4.1(c) shall be effective from April 1, 2026, with FY 2026–27 being treated as the initial load research and capacity-building year.
• The Regulations apply to all distribution licensees, including deemed distribution licensees, operating in the State of Rajasthan. They introduce a comprehensive regulatory framework for integrating demand flexibility and demand side management as part of distribution planning and grid operations.
• The Regulations introduce several new concepts including Demand Flexibility (DF), Demand Response (DR), Demand Flexibility Portfolio Obligation (DFPO), Aggregator, Flexibility Event, DF Gateway and DF/DSM Resources. They also formally recognise aggregators for providing demand response, distributed generation and energy storage services, while expressly excluding fossil fuel based diesel generators from qualifying as DF/DSM resources.
• Every distribution licensee is required to establish a dedicated DF/DSM Cell, headed by an officer not below the rank of Chief Engineer, to plan, implement, monitor and evaluate DF/DSM programmes on a continuous basis. The Regulations require licensees to integrate demand flexibility into routine grid operations with the objectives of reducing system costs, facilitating renewable energy integration, improving energy efficiency, reducing greenhouse gas emissions and protecting consumer interests.
• The Regulations require distribution licensees to prepare a rolling DF/DSM Portfolio and Implementation Plan along with their MYT/ARR filings. Licensees are also required to undertake load research, identify network-constrained areas, conduct consumer awareness programmes, maintain digital registers of aggregators and demand flexibility resources, coordinate with the State Load Despatch Centre (SLDC), and submit periodic implementation and measurement reports to the Commission.
• The Regulations prescribe phased Demand Flexibility Portfolio Obligation (DFPO) targets based on the previous year's peak demand. Distribution licensees are required to achieve demand flexibility equivalent to 0.25% of peak demand in FY 2026–27, 1% in FY 2027–28, 1.5% in FY 2028–29 and 2% in FY 2029–30, with subsequent targets to be notified by the Commission. These obligations may be fulfilled either through the licensee's own programmes or through registered aggregators.
• The Regulations introduce a performance-linked incentive framework for compliance with DFPO targets. Distribution licensees shall be entitled to an incentive of INR 0.20 crore per MW for every MW achieved in excess of the prescribed DFPO target and shall be liable to a disincentive of INR 0.20 crore per MW for every MW of shortfall. No disincentive shall apply during FY 2026–27, which has been designated as the preparatory year. 
• The Regulations require distribution licensees to identify DF/DSM Zones annually in areas experiencing network constraints and to prioritise implementation of demand flexibility measures in such areas. Illustrative programmes include smart EV charging (G2V/V2G), behind-the-meter battery energy storage systems, heat pumps, thermal energy storage, cold storage programmes, replacement of inefficient appliances, behavioural demand response programmes, agricultural load shifting, demand aggregation through aggregators, and advanced building management systems.
• The Regulations further provide that participation in demand response programmes shall ordinarily remain voluntary, require consumer consent and data privacy safeguards, and permit consumers to switch aggregators without incurring additional costs. Distribution licensees are also required to publish annual DF/DSM-related documents, including load research reports, implementation plans, evaluation reports and programme status reports, while ensuring compliance with the Digital Personal Data Protection Act, 2023.

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