The Supreme Court has ruled against a distribution licensee's attempt to deduct Generation-Based Incentive (GBI) payments — a central government subsidy paid directly to wind power generators — from the tariff it owed a wind generator under a power purchase agreement, holding that such a deduction requires a clear, express contractual term rather than being assumed as a matter of course.
The discom had argued that since the generator was separately receiving GBI support from the central government for the same generation, the contracted tariff should be reduced correspondingly to avoid what it characterised as a double benefit. The Court rejected this, holding that the PPA's tariff was a freely negotiated commercial term, and that absent an express adjustment clause tying the tariff to GBI receipt, the discom remained bound to pay the full contracted rate.
The ruling gives renewable energy generators a clear, contract-first answer to a recurring dispute in the sector: a government incentive paid directly to the generator under a separate scheme does not, without more, reduce what a distribution licensee owes under an already-signed PPA.