April marked a decisive shift from declarative policy to enforceable infrastructure. Three movements define the edition: market coupling restructures the architecture of India's short-term power markets; underground coal gasification enters commercial mining law for the first time; and Andhra Pradesh's Cabinet-level policy framework positions Google as the first private company recommended for a Deemed Distribution Licence in the state - compressing, though not displacing, the conventional statutory licensing sequence. The thread binding these is consistent: established institutional frameworks fracturing under the weight of deal-scale investment and policy urgency. For capital allocators, April's regulatory output is less a compliance calendar and more a stress test of which frameworks can hold under pressure - and which are already being worked around.

On April 21, 2026, CERC issued the draft Power Market (Second Amendment) Regulations, 2026, designating Grid Controller of India Limited (Grid India) as the market coupling operator. Comments were originally due May 16, 2026; by public notice dated May 13, 2026, CERC extended the deadline to June 5, 2026 at stakeholder request, with phased rollout anticipated from Q3 FY27.

Mechanics

Grid India will establish a separate dedicated cell to aggregate anonymized bids from all three power exchanges (IEX, PXIL, HPX), execute uniform price discovery via economic surplus maximization, and implement market splitting protocols during transmission congestion. This designation represents a material departure from the earlier proposed model under which competing private exchanges would have rotated as the coupling operator - a design that attracted criticism for embedding structural conflicts of interest, inconsistent clearing governance across different runtime environments, and fragmented accountability. By designating Grid India, which operates as the neutral national system operator with no commercial interest in exchange market share, CERC has corrected the most structurally compromised element of the July 2025 order. The framework covers Day-Ahead Market (DAM) and Real-Time Market (RTM), with subsequent extension to other segments per CERC notification.

A Power Market Coupling Procedure must be formulated within six months of regulatory approval, governing bid validation, transmission corridor allocation, and settlement protocols.

Strategic Implications

For Generators: Uniform clearing price eliminates exchange-specific arbitrage. Wind and solar generators with deviation settlement exposure (penalized from April 2027 under revised DSM norms - deferred one year) will face compressed price discovery windows. Coupling removes multi-exchange bidding strategies previously used to optimize scheduling variance.

For DISCOMs and Large Buyers: Procurement teams lose the ability to leverage exchange-specific liquidity premiums. The shift favors procurement discipline over tactical exchange selection. Traders holding positions across multiple exchanges face margin compression as price convergence erodes spread opportunities.

For Exchanges: IEX’s 80%+ market share advantage diminishes. The APTEL dismissal (February 2026) of IEX’s challenge was on maintainability grounds - the tribunal held that the July 2025 order was a precursor to regulation-making, not a final regulatory order, and therefore not amenable to challenge at that stage. Critically, APTEL explicitly preserved IEX's right to challenge the final regulations once notified, along with a simultaneous challenge to the July 2025 order. A second litigation cycle once the amendment is finalised is a live structural risk for implementation timelines. Separately, CERC is reviewing transaction fee rationalisation in parallel with coupling implementation. With transaction fees contributing over 95% of exchange revenues, any recalibration carries material sector impact independent of market share redistribution. Exchange differentiation will pivot to post-trade services, analytics, and contract structures beyond spot DAM/RTM - but the fee question will determine whether that pivot is orderly or forced.

Regulatory Integrity and Legal Risk: Two structural concerns accompany the draft regulations and should inform stakeholder submissions before May 16. First, SEBI's October 2025 interim order found insider trading worth ₹173 crore linked to officers in CERC's Economics Division who allegedly leaked unpublished price-sensitive information before the July 2025 market coupling order was made public. APTEL's February 2026 judgment directed CERC to ensure that the implicated officers are kept away from the market coupling regulation-making exercise - reminding the commission that as an independent regulator it must remain beyond suspicion. The draft notification contains no confirmation of compliance with this direction. Second, Section 27(2) of the Electricity Act, 2003 prohibits the NLDC - operated by Grid India - from engaging in the business of trading in electricity. While the MCO function does not involve buying or selling electricity, as MCO Grid India will receive complete aggregated pre-clearing bid data from all three exchanges before market clearing is completed - the most commercially sensitive information in the short-term market. This creates structural information asymmetry with Grid India's ancillary services procurement function, where it transacts with the same generators whose pre-clearing bids it will see in advance. The draft's response - a dedicated internal cell - is an administrative fix, not a structural separation. Neither CERC nor the Ministry of Power has publicly addressed whether the MCO designation is consistent with Section 27(2)'s underlying intent. For market participants and lenders, the combination of an unresolved integrity question and an untested legal designation warrants close monitoring before the Power Market Coupling Procedure is approved.

Note: Power purchase agreements (PPAs) with merchant exposure or short-term procurement clauses must model reduced price volatility and tighter bid-ask spreads. Storage-backed PPAs gain structural advantage as coupling incentivizes firming capacity. The efficiency case for coupling should be stress-tested against the shadow pilot data: Grid India's own simulation study found welfare gains of approximately 0.059% in DAM and 0.042% in RTM - reflecting a structural constraint that with one exchange holding approximately 99% of DAM and RTM volume, aggregating bids across three exchanges with minimal volume diversity produces limited incremental surplus under current market conditions. The pre-condition for coupling to deliver material efficiency gains is market depth, not regulatory architecture. PPAs with pricing assumptions anchored to material post-coupling price convergence should be reviewed against this evidentiary baseline. 

On April 17, 2026, the Solar Energy Corporation of India (SECI) issued an Expression of Interest (EoI) to assess and aggregate demand for Virtual Power Purchase Agreement (VPPA)-based renewable energy procurement. The last date to submit bids is May 15, 2026. This is not a direct tender: SECI's role is limited to facilitation - it will aggregate demand from industrial, commercial, and public sector consumers, prepare tender documents, and conduct a competitive bidding process to discover strike prices, but will not act as a counterparty in the contracts and will not assume any financial liability or responsibility for settlements between buyers and generators.

Contract Mechanics and EoI Requirements: The VPPA operates as a Contract-for-Difference (CfD) structure in which the difference between the market price at which electricity is sold and the agreed-upon strike price is settled financially between the generator and the consumer. RECs corresponding to the contracted capacity are transferred from the generator to the consumer and may be used to meet RPO or RCO compliance requirements. Bidders must indicate their tentative demand including proposed contracted capacity (in MW), indicative minimum and maximum capacity ranges, preferred commencement period, and indicative contract duration. Participants may also indicate preferred supply profiles - round-the-clock, peak-hour, or specific time blocks. Bidders must provide regulatory information including RCO applicability, compliance status, and current mode of renewable energy procurement. Eligibility is restricted to companies registered under the Companies Act, 2013, LLPs, and government-owned entities; consortiums and joint ventures are not permitted to participate. Participation at the EoI stage carries no response fee, but a non-refundable procurement capacity fee of INR 2,500 per MW will be charged from buyers for whom SECI subsequently conducts the tendering process. A pre-bid meeting is scheduled for May 13, 2026.

Implications: Three structural points warrant attention. First, SECI's facilitation-only model - demand aggregation without counterparty risk assumption - is a deliberate design choice that democratises VPPA access for mid-scale buyers who could not independently anchor a bilateral VPPA at commercially viable scale, while insulating SECI from CfD settlement exposure. The downstream tender structure will determine the actual counterparty configuration and credit enhancement requirements. Second, this EoI is the first institutional demand-side signal following CERC's VPPA Guidelines (December 24, 2025) and the REC First Amendment Regulations (March 24, 2026), which formally embedded VPPA provisions into the REC framework. The EoI converts regulatory architecture into a procurement pipeline - the transition from guidelines to live aggregation is the critical inflection point for lenders pricing VPPA bankability. Third, the VPPA framework carries a residual commencement risk: the CERC Guidelines are operative from a date to be separately notified by the Commission. Until that notification issues, the legal enforceability of VPPA strike price settlement obligations under the regulatory framework remains untested. Transaction parties and lenders should ensure that VPPA contracts address this risk in their governing law, dispute resolution, and termination provisions. For renewable energy developers, SECI's aggregated tender - once issued - creates a large, structured, creditworthy off-take channel that bypasses bilateral negotiation and DISCOM intermediation, directly complementing the 51% renewable sourcing mandate under the AP-Google DDL framework analysed here.

UNDERGROUND COAL GASIFICATION ENTERS COMMERCIAL FRAMEWORK

On April 28, 2026, the Ministry of Coal executed India’s first Coal Mine Development and Production Agreements (CMDPAs) with embedded Underground Coal Gasification (UCG) provisions for four blocks awarded to Reliance Industries and Axis Energy. This follows the Coal Gasification Mining Plan Regulations notified April 7, 2026.

Regulatory Architecture

The regulations mandate:

UCG syngas production will not attract auction premiums if utilized for captive fertilizer or chemical feedstock under existing MMDR Amendment Act, 2025 provisions.

Commercial Context

India’s fertilizer sector imports approximately 40% of urea feedstock (natural gas/naphtha). UCG-derived syngas offers import substitution at estimated ₹15–18/kg production cost versus ₹35–40/kg LNG-linked pricing (per Ministry of Coal project feasibility assessments). For integrated producers, this represents a 30–40% feedstock cost reduction, materially improving subsidy dependency ratios and creating a structural case for government-backed offtake commitments at financial close. For competing developers without Reliance or Axis's balance sheet depth, the first-generation CMDPA terms - particularly the DGMS clearance sequencing and cavity validation milestones - will set the de facto commercial benchmark against which subsequent auction blocks are structured and priced.

Structuring Considerations:

Regulatory Stability: UCG mining plans fall outside conventional open-cast/underground frameworks. DGMS interpretation of ventilation, blasting-equivalent approvals, and worker safety protocols will evolve through first-generation projects.

On April 30, 2026, the Ministry of Power revised its Make in India procurement norms for HVDC (LCC type) substations under the Public Procurement (Preference to Make in India) framework, replacing the earlier uniform 60% local content requirement with a phased roadmap: 30% until March 2028, 40% until March 2030, 50% until March 2032, and 60% by March 2035.

For EPC contractors and transmission developers, the phased relaxation extends the window for import-heavy HVDC bill-of-materials without triggering procurement non-compliance under active tenders. HVDC technology - dependent on thyristors, converters, and control systems that are largely sourced from Hitachi Energy, Siemens Energy, and ABB - could not realistically meet an immediate 60% local content threshold; the phased schedule reflects that commercial reality. Lenders financing transmission projects with HVDC components should re-examine procurement covenants that reference the pre-April 2026 local content schedule - representations made at financial close may require updating before next drawdown.

Watch: NITI Aayog's Critical Mineral and Manufacturing Committee assessments have flagged domestic HVDC component manufacturing as a strategic gap. The $14-15 billion estimated HVDC market opportunity over the next five to six years creates a structuring opportunity for PE funds and manufacturing-linked infrastructure investors - particularly in converter transformer, valve, and control system manufacturing through JV structures with global OEMs.

On April 22, 2026, the Andhra Pradesh Government issued G.O.Ms. No.32 from the Energy (Power-II) Department, approving a policy framework for grant of Deemed Distribution Licences (DDL) to eligible Strategic Data Centres in the State. The framework is not Google-specific: it applies to any data centre developer with a minimum connected load of 300 MW, with aggregation permitted across multiple locations within the State. Google's upcoming 1 GW data centre hub in Visakhapatnam - developed by Raiden Infotech India Private Limited (a Google subsidiary) in partnership with Adani Infra Limited across three campuses spanning 601 acres, and described as India's largest single foreign direct investment at approximately $15 billion - is the immediate context, with commissioning targeted by July 2028. The DDL enables qualifying operators to directly procure and distribute electricity within their licensed project boundary, making Google the first private company to be positioned for such a licence in Andhra Pradesh.

The Regulatory Competence Question

The G.O. invokes the Electricity Act, 2003, a Government of India notification dated March 3, 2010 establishing precedent for Deemed Distribution Licences for self-contained infrastructure projects, and APERC Distribution License Regulation No. 10 of 2013 as its legal foundation. Critically, the Government has approved to "recommend" grant of the DDL - not to grant it directly. APERC is a formal copy recipient of the G.O. and the Member Convenor of the AP Power Coordination Committee is directed to take further action. This distinguishes the process from a straightforward Section 14 bypass: it is closer to an executive direction within which APERC retains the formal licensing function. The process is compressed and irregular - a policy framework issued in advance of APERC's own regulatory process - but it is potentially curable through a subsequent APERC order. The live legal question is whether APERC, once directed by the Government, can exercise independent regulatory judgment on licence conditions, or whether the G.O.'s prescribed Terms of Reference effectively pre-empt APERC's discretion under Section 14. Existing DISCOMs (APSPDCL, APEPDCL, APCPDCL) are formal copy recipients of the G.O. and have standing to challenge before APERC or the High Court if the framework encroaches on their licensed areas.

A further dimension: the G.O.'s 300 MW eligibility threshold creates a classification that structurally favours hyperscale operators over mid-scale data centre developers. If challenged, a court will examine whether that classification has a rational nexus to the policy objectives of energy security and investment attraction - or whether it constitutes an arbitrary preference susceptible to Article 14 scrutiny.

Structural Implications: The Visakhapatnam model - if it survives regulatory and legal scrutiny - redefines the power procurement architecture for hyperscale data centres in India at scale. The G.O. is not project-specific: any data centre developer with 300 MW or more of connected load in Andhra Pradesh is eligible, with aggregation across locations permitted. This creates a replicable template that other power-surplus states with large data centre pipelines - Telangana, Maharashtra, Tamil Nadu - may adopt. For renewable energy developers, the framework is directly consequential: the DDL must source a minimum of 51% of its total energy requirement from certified renewable sources, creating a large, creditworthy, long-term green PPA counterparty that bypasses exchange and DISCOM intermediation entirely. For existing DISCOMs, the G.O. includes explicit safeguards - no stranded cost, no consumer migration, standby supply arrangements on APERC-regulated terms, and a six-month exit notice with handover obligations - which reduce the commercial case for a territorial challenge. Watch: whether APERC issues a formal DDL order, whether it exercises independent judgment on conditions beyond those prescribed by the G.O., and whether any of the three DISCOM CMD recipients file a regulatory challenge before APERC or a writ before the High Court.

KARNATAKA HIGH COURT - DSM REGULATIONS STAYED

On April 27, 2026, Justice K.S. Hemalekha of the Karnataka High Court, on petition filed by the National Solar Energy Federation of India (NSEFI), stayed enforcement of certain provisions of the CERC (Deviation Settlement Mechanism and Related Matters) Regulations 2024, which had come into effect from April 1, 2026, allowing renewable energy developers to continue operating under the prior DSM framework pending the next hearing. NSEFI alleged that the regulations were notified without complying with the mandatory prior publication requirement under the Electricity Act, 2003. The regulations introduced three substantive changes: the wind deviation tolerance band was narrowed from ±15% to ±10%; the solar deviation tolerance band was narrowed from ±10% to ±5%; and the deviation calculation formula was changed from available capacity to scheduled generation - a materially more onerous standard that penalises generators for intermittency beyond their control. Critically, NSEFI argued that the revised deviation formula as ultimately notified did not appear in the draft notification on which stakeholders had been invited to comment, denying the industry a meaningful opportunity to object to the most commercially significant change. Pending the next hearing on June 10, 2026, renewable energy developers may continue operating under the prior DSM framework.

Implications: The stay has immediate operational relief value for solar and wind developers in Karnataka who would otherwise face enhanced deviation penalties under the 2024 regulations. The consultation ground - if upheld - raises a broader administrative law challenge: CERC's regulatory process for DSM amendments may face similar scrutiny at the national level, particularly given that revised DSM norms (with deviation settlement penalties from April 2027) are already flagged in this edition. The procedural objection - that the formula change was not in the draft notification - is analytically distinct from the substance of the tighter tolerance bands and may succeed independently. Lenders should note that the Karnataka stay does not affect central DSM regulations directly, but the procedural challenge, if successful, provides a replicable template for challenging other RE-sector regulations introduced without adequate prior notification of substantive changes under the Electricity Act's regulatory process requirements.

UTTARAKHAND HIGH COURT : STATE ELECTRICITY GENERATION TAX STRUCK DOWN

In THDC India Ltd. v. State of Uttarakhand, decided on April 27, 2026, Justice Alok Kumar Verma of the Uttarakhand High Court delivered the final opinion in a reference arising from a split Division Bench verdict, striking down the Uttarakhand Water Tax on Electricity Generation Act, 2012 (“EG Act”) as ultra vires. The EG Act had imposed a tax on power companies using river water to generate electricity. The prior Division Bench had produced a split: Chief Justice Vipin Sanghi upheld the EG

Act; Justice Ravindra Maithani declared it unconstitutional. Justice Verma, as the third judge, concurred with Justice Maithani, holding that the State Legislature is not competent to levy a tax on the generation of electricity. Petitioners included THDC India Ltd., NHPC (represented by Solicitor General Tushar Mehta), and Alaknanda Hydro Power Company, who argued that the levy was in substance a tax on electricity generation  - a  field within Parliament's exclusive legislative competence.

Precedential Value: This ruling confirms that sub-sovereign fiscal impositions on electricity generation - whether by state legislation or local body resolution - face a constitutional barrier under Entry 53, List I and the pre-emption effect of the Electricity Act, 2003. For hydropower developers and run-of-river IPPs in Uttarakhand, the ruling eliminates a state fiscal imposition that was materially affecting project IRR. Lenders with covenants referencing state-level electricity taxes in Uttarakhand should update their risk assessments accordingly.

SUPREME COURT : HIGHWAY SAFETY ELEVATED TO FUNDAMENTAL RIGHT

In Re: Phalodi Accident v. National Highways Authority of India [2026 INSC 388; Suo Motu Writ Petition (Civil) No. 9/2025], decided on April 13, 2026, a Division Bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar took suo motu cognizance following the loss of 34 lives in two successive road accidents in November 2025 - a bus collision near Phalodi, Rajasthan (15 deaths) caused by a trailer illegally parked near an unauthorized roadside dhaba, and a collision near Chevella, Telangana (19 deaths) on a poorly lit stretch without adequate signage or dividers. The Bench held that commuter safety is an integral facet of the right to live with dignity under Article 21, framing the State's obligation to maintain safe highways as a positive constitutional mandate that cannot be excused by financial or administrative constraints. The Court issued the following interim directions:

Note: For HAM/BOT concessionaires, the prohibition on commercial structures within the highway right of way and the blackspot infrastructure mandates may trigger Change in Law claims if not covered under "Good International Practices" clauses in concession agreements. Copies of the order have been directed to all State Chief Secretaries and Directors General of Police, signalling that the directions are intended to operate as hard legal obligations rather than policy guidance. The matter has been listed after two months for compliance reporting, with NHAI and State PWDs jointly and severally liable for lapses within their jurisdictions.

This publication contains general information and is not a substitute for specific legal advice. No client-lawyer relationship is created by its receipt.

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