By S&S Co. Advocates & Solicitors · Published 23 April 2026 · Informational content, not legal advice: see our disclaimer
Common Categories of PPA Disputes
Disputes under Power Purchase Agreements (PPAs) between generators and distribution licensees commonly fall into a handful of recurring categories: disputes over the tariff actually payable where a regulator's order diverges from the contractually agreed rate, disputes over delayed payments and the applicable late-payment surcharge, disputes over force majeure claims excusing non-performance, and disputes over curtailment or "backing-down" instructions that reduce the generator's scheduled offtake.
"Must-Run" Status and Its Limits
Renewable generators, solar and wind in particular, are generally accorded "must-run" status, meaning discoms are expected to accept their full available output except where genuine technical constraints require curtailment: grid instability, transmission congestion, or system-security concerns identified by the relevant load despatch centre. Must-run status is not, however, absolute; it is qualified by these technical exceptions, and the dividing line between a genuine technical curtailment and a commercially motivated one is frequently the subject of dispute.
What Supports a Curtailment Compensation Claim
Where a generator believes it has been curtailed without a genuine technical justification, the strength of its compensation claim generally turns on documentation: its own generation logs and forecast data for the curtailed period, any written curtailment instruction issued by the discom or load despatch centre, and, critically, whatever technical justification, or absence of one, the discom is able to produce when called upon to explain the instruction. Tribunals have been willing to direct compensation calculated on deemed generation where the discom cannot substantiate a technical basis for curtailment.
Force Majeure: Narrowly Construed
Appellate authority has consistently held that force majeure clauses in PPAs are construed strictly: an event must have been genuinely unforeseeable, and the party invoking force majeure must show it took reasonable mitigating steps, contemporaneously documented, rather than simply asserting the defence after the fact once a dispute has crystallised. A party anticipating a force majeure argument, on either side of a PPA, should be building the evidentiary record for it in real time, not retrospectively.
Where PPA Disputes Are Resolved
Most PPA disputes involving a regulatory dimension, tariff computation, curtailment, or must-run compliance, are filed before the relevant State or Central Electricity Regulatory Commission in the first instance, with appeal to the Appellate Tribunal for Electricity (APTEL) and, on substantial questions of law, further appeal to the Supreme Court. Purely contractual disputes not involving regulatory determination may instead be resolved through an arbitration clause where the PPA contains one.
Frequently Asked Questions
What does 'must-run' status mean for a renewable generator?
It means the relevant discom is generally expected to accept the generator's full available output, except where genuine technical constraints such as grid instability or transmission congestion require curtailment.
Can a discom curtail a renewable generator to reduce its power purchase cost?
Not as a stand-alone justification: curtailment of a must-run generator is expected to be backed by a genuine technical justification, not simply a preference for cheaper conventional power.
What evidence supports a curtailment compensation claim?
The generator's own generation and forecast logs for the curtailed period, the discom's written curtailment instruction, and whatever technical justification the discom can (or cannot) produce for it.
How strictly are force majeure clauses in PPAs construed?
Very strictly: the triggering event must have been genuinely unforeseeable, and the party invoking it must show it took adequate, contemporaneously documented mitigating steps.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Electricity Act, 2003, Sections 61-66 and 86.
- Applicable State Electricity Regulatory Commission Renewable Purchase Obligation and must-run regulations.
- Indian Electricity Grid Code, as amended, for curtailment and scheduling protocols.