A wind power PPA locked at ₹2.64/kWh. Then the rules changed. Who pays?

They signed a 25-year deal at ₹2.64 per unit. Then the regulator changed the rules. The developers said: pay us more. A Gujarat wind developer had locked in a fixed price with the state's bulk power buyer. When the central regulator later tweaked a formula, the developer demanded a variable, year-on-year rate — and two tribunals agreed. The Supreme Court had to decide: is a voluntary contract still binding when the regulator shifts the goalposts?

The answer would determine whether every renewable energy power purchase agreement (PPA) in India was a fixed promise or a floating bet.

When the 25-year deal was signed

In 2010, the Central Electricity Regulatory Commission (CERC) introduced the Renewable Energy Certificate (REC) mechanism. Under this system, wind and solar developers could sell electricity at a price set by the state regulator, and separately trade RECs — tradable certificates representing the environmental value of green power. The idea was to make renewable projects viable even where the state's tariff was low.

Gujarat Urja Vikas Nigam Limited (GUVNL), the bulk power procurer for Gujarat's distribution companies, signed 25-year PPAs with several wind developers, including Renew Wind Energy (Rajkot) Pvt. Ltd. The agreed tariff: a flat ₹2.64 per kilowatt-hour (kWh). The developers entered the agreements voluntarily, under the REC Regulations 2010, which allowed them to sell power at a price "not exceeding the pooled cost" — a reference to the average power purchase cost (APPC) across all sources.

For years, the contracts ran as agreed. Then CERC changed the language.

The amendment that broke the deal

In July 2013, CERC amended the REC Regulations. The phrase "at a price not exceeding pooled cost" became "at the pooled cost." The change seemed minor — a single word. But it had a dramatic effect. Under the old rule, developers could voluntarily accept a rate below the APPC. Under the new rule, the developers argued, they were entitled to exactly the APPC — a dynamic figure that changed every year.

The wind developers approached the Gujarat Electricity Regulatory Commission (the State Commission) in 2015, seeking a revision of their fixed ₹2.64 tariff to a variable year-on-year APPC rate. They claimed that the original PPA was signed under coercion — that GUVNL had forced them into the low tariff by threatening to deny them REC benefits. The State Commission agreed, and in July 2015 directed GUVNL to revise the tariff.

GUVNL appealed to the Appellate Tribunal for Electricity (APTEL). In December 2018, APTEL dismissed the appeal. GUVNL went to the Supreme Court, which in February 2019 disposed of the matter with liberty to seek a review before APTEL. APTEL dismissed the review in July 2020. GUVNL came back to the Supreme Court.

Three questions, one answer

The Supreme Court bench — Justice Sanjay Kishan Kaul, Justice S. Ravindra Bhat, and Justice M.M. Sundresh — framed three issues. First, did the State Commission have the jurisdiction to re-determine a tariff in a PPA that was voluntarily entered into under CERC Regulations? Second, did the 2013 amendment apply retrospectively to PPAs signed before July 2013? Third, was the developers' claim of coercion adequately pleaded and proved?

GUVNL's counsel argued that the PPA was a commercial contract freely signed. The amendment was prospective — CERC's own Statement of Reasons had clarified that it applied only to PPAs entered after July 11, 2013. And the coercion claim, GUVNL said, was a bare allegation without any supporting evidence or specific pleadings.

The developers countered that the State Commission had the power under Section 86(1)(a) and (b) of the Electricity Act, 2003 (the sections that define the State Commission's functions, including tariff determination and dispute resolution) to revise tariffs in the public interest. They argued that the amendment clarified the original intent of the REC regime — that developers should receive the full APPC — and therefore applied retrospectively. And they pointed to the unequal bargaining power between a state monopoly and a private developer as evidence of coercion.

Why the coercion claim collapsed

The Supreme Court found the developers' case built on sand. The judgment, delivered on April 13, 2023, held that a party alleging fraud, coercion, duress, or undue influence must "prima facie establish it by laying out material facts with specificity." The developers had not done this. Their petitions before the State Commission contained only a bare allegation of coercion — no details of when the pressure was applied, by whom, or what form it took. No documents, no emails, no witness statements.

"Appellate tribunals cannot render findings on coercion in a casual or cavalier way without proper pleadings and adequate evidence," the Court observed. The concurrent findings of the State Commission and APTEL were, in the Court's words, "unsustainable" — they had accepted the coercion claim without requiring the developers to prove it.

The Court also rejected the argument that the PPA required prior approval from the State Commission. Unlike specific regulations in Maharashtra, Delhi, and Andhra Pradesh that mandated such approval, Gujarat had no such requirement. The PPA was a voluntary commercial contract between two parties exercising free choice.

When the amendment did not apply

On the retrospective application question, the Court turned to CERC's own Statement of Reasons accompanying the 2013 amendment. That document explicitly stated that the change applied to PPAs entered after July 11, 2013. The developers' PPAs were signed years earlier, under the 2010 Regulations. The old rule — "at a price not exceeding pooled cost" — gave developers the flexibility to accept a lower tariff. They had done so. They could not now demand a higher rate under a rule that did not exist when they signed.

The Court also clarified the scope of the State Commission's power under Section 86(1)(e) of the Electricity Act (the provision that requires the State Commission to promote renewable energy). That power, the Court held, does not extend to rewriting a voluntary contract between consenting parties. Promoting renewable energy means creating a stable regulatory environment — not overturning settled agreements every time a regulation changes.

The appeal was allowed. The concurrent findings of the State Commission and APTEL were set aside. The fixed tariff of ₹2.64/kWh stood.

What this means for every PPA in India

For practitioners advising renewable energy developers, the judgment delivers a clear message: a voluntary PPA is a binding contract, not a starting point for renegotiation. If you want a dynamic tariff, negotiate it at the time of signing. If you claim coercion, you must plead it with specificity — dates, persons, documents — and prove it with evidence. A bare allegation will not survive scrutiny, even if two tribunals accept it.

The judgment also settles the retrospective application question: regulatory amendments are prospective unless the regulator explicitly states otherwise. Developers who signed PPAs under the old REC regime cannot demand the new tariff.

THE PLAY: When signing a PPA under a regulatory regime that later changes, the contract's terms govern — not the regulator's subsequent amendments — unless the PPA itself contains a price revision clause.

The wind developers had bet on a changing regulatory wind. The Supreme Court held them to the deal they made when the wind was still.