Energy and Infrastructure Newsletter – Key Legal & Regulatory Updates

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. (Link)

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. (Link)

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 Bond[1] 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 Guarantee[2]—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. (Link)

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). (Link)

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. (Link)

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. (Link)

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.

Ministry of Environment, Forest and Climate Change (MoEF&CC)

Draft Greenhouse Gases Emission Intensity Target Rules, 2025. (Link)

On June 23, 2025, the MoEF&CC published the draft Greenhouse Gases Emission Intensity Target Rules, 2025 (Draft GEI Rules) for prescribing the greenhouse gas emission intensity (GEI) targets for Obligated Entities[3] under the Carbon Credit Trading Scheme, 2023.

The Draft GEI Rules prescribe GEI targets, for compliance years 2025 to 2026 and 2026 to 2027, for the Obligated Entities identified under Aluminium, Iron and Steel, Petroleum Refinery, Petrochemical Units, and Textile sectors.

Obligated Entities must achieve GEI targets or purchase carbon credit certificates from the Indian carbon market to meet the GEI targets.

Obligated Entities achieving the reductions greater than GEI targets will be issued carbon credit certificates. The calculation of the carbon credits to be issued in such case are as follows:

Obligated Entities not able to achieve GEI targets will be required to purchase carbon credit certificates according to the following calculation:

Non-compliance will attract levy of environmental compensation  which shall be equal to 2 times the average trading price of carbon credit certificates – for the year in which the non-compliance has occurred, payable within 90 days of imposition  by the Central Pollution Control Board.

Central Electricity Regulatory Commission (CERC)

Draft CERC (Power Market) (First Amendment) Regulations, 2025. (Link)

On June 17, 2025, the CERC published the Draft Power Market (First Amendment) Regulations, 2025 (Draft Power Market Regulations), as a further step towards integrating the proposed framework for Virtual Power Purchase Agreements (VPPAs) introduced by the Draft Guidelines on VPPAs (Draft Guidelines).

The Draft Guidelines were issued to formally recognise VPPAs within the Indian electricity regulatory landscape and to enhance the bankability of renewable energy projects supported by such arrangements. Building on this initiative, the CERC has now proposed amendments to the existing provisions of the CERC (Power Market) Regulations, 2021, with the objective of comprehensively incorporating VPPAs into the regulatory framework governing Indian electricity markets in India.

The Draft Power Market Regulations propose several key changes, including: (i) enhanced recognition of over-the-counter (OTC) platforms; (ii) express recognition of VPPAs; and (iii) inclusion of VPPAs, battery energy storage system contracts, and other similar arrangements as eligible contracts for trading in the OTC market.

These proposed amendments represent an important development in aligning India’s power market regulations with emerging market trends and supporting the growth of contemporary clean energy solutions.

CERC (Deviation Settlement Mechanism and Related Matters) (Second Amendment) Regulations, 2025. (Link)

On June 25, 2025, the CERC notified the CERC (Deviation Settlement Mechanism and Related Matters) (Second Amendment) Regulations, 2025 (Amended DSM Regulations).

The CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2024, provide the general rule that no charges are payable for infirm power injected into the grid. However, if infirm power is scheduled after the successful completion of a trial run (as defined in the Grid Code), any deviation from the scheduled infirm power is charged at rates applicable to a general seller or a wind/solar (WS) seller, as the case may be. In addition, if the system frequency is above 50.05 Hz, no charges apply to over-injection of scheduled infirm power by a general seller or WS seller.  

The Amended DSM Regulations now create a specific exception to the general rule for thermal generating stations. The Amended DSM Regulations provide that infirm power injected into the grid from the date of synchronisation of a unit of a thermal generating station until the successful completion of its trial run will be compensated at the normal deviation charge rate for each time block, subject to a maximum of ₹2.86/kWh. This new provision applies in addition to the existing rules.

CERC (Sharing of Inter-State Transmission Charges and Losses) (Fourth Amendment) Regulations, 2025. (Link)

On June 26, 2025, the CERC notified the CERC (Sharing of Inter-State Transmission Charges and Losses) (Fourth Amendment) Regulations, 2025 (ISTS Amendment Regulations). The ISTS Amendment Regulations introduce several key changes to the regulatory framework concerning inter-state transmission system (ISTS).

Regulation 9(8) of the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020 (ISTS Regulations), now provides that usage-based charges for drawee Designated ISTS Customers (other than state distribution licensees) will be apportioned from the state’s aggregate charges based on their respective general network access, replacing the earlier node-level calculation which was excluded from the state’s aggregate.

Regulation 12(1) of the ISTS Regulations has been amended to clarify that, for generating stations with dual connectivity (to both ISTS and intra-state systems), deviations will be computed as the net metered ex-bus injection exceeding the sum of inter-state general network access and intra-state access.

Regulation 13(2) of the ISTS Regulations significantly overhauls the ISTS waiver structure. Pumped storage projects are now eligible for a full waiver on ISTS charges for 25 years if construction contracts are awarded by June 30, 2028.

Energy storage systems (ESSs) are now categorised as either connected to renewable energy generating stations (REGS) or not. ESSs connected to REGS achieving commercial operation by June 30 ,2028 are eligible for a full waiver of the ISTS Charges for 12 years, while those not connected to REGS will receive a tapered waiver (100% to 25%) for commercial operation dates (CODs) up to June 30, 2028, also for 12 years.

Offshore wind-based REGS and green hydrogen/ammonia plants have been introduced as distinct categories with tapered waivers for ISTS charges extending to 2035 and 2033, respectively.

Projects facing force majeure, including unavailability of transmission, may secure up to 2 extensions (of 6 months each) to retain eligibility, treating COD as if achieved on June 30, 2025.

The ISTS Amendment Regulations permit REGS (wind, solar, or hybrid), RHGS (wind-solar hybrid), or Battery ESSs eligible for waiver of the ISTS charges (Eligible Projects), with scheduled COD on or before June 30, 2025, to seek extensions to achieve COD due to force majeure events, including (i) non-availability of the transmission system or (ii) reasons not attributable to the Eligible Projects. If COD is achieved within the extended period, the project remains eligible for the waiver of the ISTS charges as if COD occurred on June 30, 2025. Each extension may not exceed 6 months, and no more than 2 extensions are permitted beyond June 30, 2025.

Regulation 13(3) of the ISTS Regulations has been amended to clarify the treatment of situations where the generation capacity of a connectivity grantee does not achieve its COD by the start date of its granted connectivity. In such cases, the ISTS Amendment Regulations now explicitly requires the connectivity grantee to pay the yearly transmission charges associated with the terminal bays and the associated transmission system corresponding to the portion of the connectivity capacity that has not yet achieved COD.

Regulation 13(6) of the ISTS Regulations has been amended to expand the scope of the obligation to pay yearly transmission charges prior to the COD of the generating station. Previously, this obligation applied only to transmission elements of the associated transmission system that were required by the generating station before the COD of the ATS. The ISTS Amendment Regulations now clarifies that this obligation also extends to include both – the ATS and the terminal bays.

Regulation 13(14) of the ISTS Regulations has been inserted to clarify the methodology for determining the availability of a transmission system or its individual elements. It expressly provides that the transmission system availability factor shall be calculated strictly in accordance with the methodology prescribed under the relevant Tariff Regulations, irrespective of anything to the contrary in the transmission service agreement executed through tariff-based competitive bidding.

Regulation 13(15) of the ISTS Regulations has been introduced to address situations where the yearly transmission charges for certain transmission elements are not specifically available. In such cases, the Central Transmission Utility is empowered to calculate and allocate the applicable yearly charges for those elements. This calculation is to be carried out by apportioning the total yearly transmission charges approved by the CERC for the integrated transmission project, based on the indicative capital cost of the respective elements.

Central Electricity Authority (CEA)

Draft CEA (Measures relating to Safety and Electric Supply) (1st Amendment) Regulations, 2025. (Link)

On 19 June 2025, the CEA published the CEA (Measures relating to Safety and Electric Supply) (First Amendment) Regulations, 2025 (Draft Safety Amendment), aimed at strengthening safety provisions for battery energy storage systems (BESS).

The Draft Safety Amendment has introduced Chapter X-A, dedicated specifically to safety measures for BESS. The Draft Safety Amendment mandates that all BESS must use chargers that are designed for the specific battery chemistry. The Draft Safety Amendment further mandates that all BESS must be two-fault tolerant, meaning the battery energy storage system must continue to operate safely or shut down safely even after 2 independent faults have occurred.

Each BESS must also be equipped with a Battery Management System (BMS) capable of monitoring and recording voltage, temperature, and current at the cell or module level. The BMS must be programmed to raise audio-visual alarms and initiate automatic shutdown and discharge – if any of the monitored parameters exceed the operating range prescribed by the original equipment manufacturer.

Further, the Draft Safety Amendment proposes that all battery container with a capacity of 200 kWh or above must be equipped with an automatic water-based fire suppression system.

The Draft Safety Amendment also provides that CEA shall publish the necessary technical standards applicable to the Draft Safety Amendment.

Reserve Bank of India (RBI)

RBI (Project Finance Directions), 2025. (Link)

On June 19, 2025, the RBI issued the RBI (Project Finance) Directions, 2025 (RBI Directions), establishing a harmonised framework for financing projects in both infrastructure and non-infrastructure sectors (including commercial real estate and commercial real estate–residential housing) by regulated entities — comprising all commercial banks, non-banking financial companies, primary (urban) cooperative banks, and all-India financial institutions.

The RBI Directions also specify the regulatory treatment applicable in case of changes to the Date of Commencement of Commercial Operations of such projects.

The RBI Directions will come into effect from October 1, 2025. They will not apply to projects that achieved financial closure before this date, which will continue to be governed by the earlier prudential guidelines. However, any resolution of a fresh credit event and/or any change in material terms and conditions of the loan contract for such projects, occurring after October 1, 2025, will be governed by the provisions of the RBI Directions.   

The Ministry of Road Transport and Highways (MoRTH)

Automated and Intelligent Machine-aided Construction (AI-MC) in National Highways Projects. (Link)

On June 23, 2025, the MoRTH has published a circular introducing the adoption of Automated and Intelligent Machine-aided Construction (AI-MC) in national highways projects. The initiative follows significant growth in the national highway network and the increasing incorporation of high embankments in construction of national highways – which require significant amount of earthwork and proper compaction.

Appendix-A of the circular lists the projects sanctioned — but not yet awarded — where the circular will be implemented during FY 2025–26.

National Highways Authority of India (NHAI)

NHAI releases the Asset Monetization Strategy Document for the Roads Sector. (Link)

On June 09, 2025, the NHAI has published the Asset Monetization Strategy for the Roads Sector (“Strategy Document”) to unlock the economic value of operational national highway assets and accelerate infrastructure development through innovative funding. The Strategy Document is aimed at maximizing the value of completed national highways and fostering a robust market for public road assets in India. The document outlines a medium-term approach to asset monetization, with a focus on enhancing efficiency, transparency, and risk management in monetization processes.

Key objectives of the Strategy Document include streamlining and standardizing procedures to ensure timely and efficient execution of monetization activities, introducing measures to enhance transparency across all transactions and operations, and identifying and mitigating potential risks associated with asset monetization.

The Strategy Document particularly emphasizes monetization through the Toll-Operate-Transfer (ToT) and Infrastructure Investment Trusts (InvIT) models. The Strategy Document will be reviewed and updated after 4 years, in FY 2028–29.

NHAI issues revised delegation of power for refinancing and restructuring in HAM projects. (Link)

On June 21, 2025, the NHAI issued a policy circular amending the provisions of its earlier circular on the delegation of powers for refinancing and restructuring of PPP projects. The circular specifically addresses the refinancing of Hybrid Annuity Model (HAM) projects that have not yet achieved COD.

As per the revised provisions, refinancing of HAM projects that have not achieved COD may be permitted if the delay is attributable to NHAI, and:

• the refinancing is from a scheduled bank, non-banking financial company regulated by the RBI, or a financial institution of the Government of India, to another such entity; or
• the existing lender(s) are unwilling to disburse funds for the project.

This approval is subject to the condition that the concessionaire provides a legal undertaking confirming that NHAI’s termination liability will not, at any point, exceed the liability stated in the financial model submitted at the time of financial close.

[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.

[3] The Carbon Credit Trading Scheme, 2023 defines ‘obligated entities’ as entities notified under the compliance mechanism, which is further defined as the mechanism whereby obligated entities must comply with the greenhouse gas emission norms as may be notified by the central government