Power Purchase Agreements: Caught in a legal cesspool

States reneging on power contracts sours competitive bidding for renewable energy

In the past six months, there has been a surge in instances of states reneging on power purchase agreements or renegotiating tariffs with developers. This comes at a time when renewable power prices are witnessing a free fall and coal-based power has hardly any takers with no state signing long-term contracts.

This has not only brought into the limelight the need for separate regulations for awarding renewable energy projects but also the need to preserve the legal sanctity of a power purchase agreement (PPA).

“States shall endeavour to procure power from renewable energy sources through competitive bidding to keep the tariff low,