INDIA Trends and Developments Contributed by: Poonam Verma Sengupta, Aditya Gupta, Sakshi Kapoor and Rajesh Jha, JSA
2026 in Petition No. 9/SM/2026, CERC determined the value of the “X” factor for wind and solar generators under the CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2024. The X factor determines the extent to which deviations from sched- uled generation are considered for DSM settlement purposes. The Order provides for a phased reduc- tion in the X factor over time, signalling progressively stricter forecasting and scheduling requirements. These developments reflect an increasing emphasis on operational accountability as renewable energy becomes a significant component of India’s power system. Evolving project risks and dispute trends The regulatory developments discussed above are also influencing the nature of disputes in the sector. As renewable energy projects become increasingly dependent on timely access to transmission infra- structure and compliance with evolving regulatory requirements, disputes are progressively shifting from traditional tariff and “change in law” issues towards project implementation and operational risks. A significant area of dispute concerns mismatch between commissioning of generation projects and readiness of the associated transmission infrastruc- ture. In such cases, generation capacity might be ready, but evacuation infrastructure or transmission elements required for long-term access are delayed or not fully operational. This has resulted in disputes regarding transmission charge liability, operationalisa- tion of Long-Term Access/GNA rights and allocation of transmission-side risks. Project delays continue to present another challenge. A project might be delayed due to land litigation, right of way issues, COVID-related disruptions, transmis- sion-side delays and other external factors, which are often recognised through extensions granted by gov- ernmental authorities. However, such extensions are not always accorded similar treatment while determin- ing transmission charge liability, connectivity obliga- tions or mismatch consequences under the GNA and transmission charges sharing framework.
The growing importance of connectivity has also elevated the significance of milestone compliance. Recent CERC orders indicate a pragmatic approach in appropriate cases, particularly where substantial project progress has been achieved. At the same time, connectivity revocation and encashment of connectiv- ity bank guarantees remain important regulatory risks. Evolving technical and grid compliance requirements are also generating new disputes. A CEA Working Group’s recommendations of July 2022 required renewable energy developers to install additional reactive power compensation equipment after project award as a condition for continued grid access and connectivity compliance. This has resulted in change in law claims concerning recovery of the associated capital expenditure and disputes regarding allocation of costs arising from post-bid regulatory requirements. Recent judicial decisions have also underscored the importance of contractual force majeure procedures. Even where delays arise from circumstances beyond the control of developers, entitlement to relief may depend on compliance with prescribed force majeure notice requirements. The proceedings before the Supreme Court concern- ing protection of the endangered Great Indian Bus- tard (GIB) bird species also highlighted the impact of Government’s GIB conservation plans on project implementation. The litigation created prolonged uncertainty regarding routing of transmission lines and approvals under Section 68 of the Electricity Act, 2003 for evacuation infrastructure across several renewa- ble energy corridors in GIB sensitive areas. Although MNRE subsequently granted timeline extensions for affected projects, issues relating to eligibility for such extensions, recovery of additional costs arising from revised transmission requirements, and transmission charge liability during delayed or mismatch periods continue to arise. Emerging opportunities in the energy transition While the above developments highlight the increas- ing complexity of project development and operation, they also reflect the emergence of new regulatory frameworks intended to support the next phase of India’s energy transition.
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