The Institutional Checklist for PPA Bankability in India

The 2026 offtake gap

The defining feature of Indian renewable contracting this cycle is not price — it is signature. Mercom counted about 10.1 GW of SECI-awarded capacity without an offtaker in April 2026, with tariffs on offer spanning INR 2.42/kWh to INR 8.1/kWh. Reporting the same month put the total stranded pool near 43 GW, with government and SECI aiming to conclude power sale agreements for 10–12 GW in the first half of FY27 by reworking price and contract terms. In May 2026 MNRE circulated a proposed one-time relief package for capacity holding Letters of Award without executed PPAs. Any bankability assessment that ignores this backdrop is assessing the wrong risk.

• · Discoms deferred contracting where discovered tariffs sat above their avoided cost.
• · Solar-hour surplus reduced the urgency to contract additional flat solar.
• · Reworked terms on legacy awards create a repricing precedent underwriters must consider.

Counterparty and payment security

We start with who pays. State distribution utilities, intermediary procurers such as SECI and NTPC, commercial and industrial offtakers and captive structures each carry different credit and behavioural profiles. The diligence set is the counterparty's audited financials and receivable cycle, the letter of credit and its revolving mechanics, payment security fund or escrow arrangements, late payment surcharge history, and the actual days-sales-outstanding record on comparable contracts. Intermediary procurement adds a back-to-back structure that must be read end to end: the developer's protection is only as strong as the downstream PSA.

A Letter of Award is not offtake; in 2026 the distance between the two has been measured in gigawatts.

Tariff, term and currency

Fixed-tariff, 25-year rupee-denominated contracts remain the market norm for competitively bid capacity; SECI's August 2026 FDRE round-the-clock tender cleared at INR 5.25/kWh under 25-year PPAs. For cross-border capital the question is what a fixed nominal rupee tariff means after currency and inflation, and whether any escalation, indexation or partial pass-through exists. We also examine tariff adoption by the regulator, since an unadopted tariff is not yet an enforceable price.

Curtailment and grid availability

Curtailment must be allocated in the contract. We look for the definition of grid unavailability, the deemed generation formula, compensation caps and carve-outs for system security events, and the evidentiary process for claiming. Where the transmission element is delayed by the network owner rather than the developer, we test whether the PPA and connectivity documents move in step — CERC's August 2026 draft relief on transmission charges for grid-delayed projects is a reminder that this misalignment is systemic, not isolated.

Scheduling, forecasting and deviation

Deviation settlement liabilities are a real and recurring cash item. We model the forecasting obligation, permitted error bands, the applicable state or central deviation regime, penalty slabs, and the operational capability of the asset manager to meet them. Storage-backed and firm-dispatchable contracts raise the stakes: an availability-linked obligation converts forecasting error into contractual default risk.

Change in law, force majeure and termination

Change-in-law relief has been the single most litigated provision in Indian renewable contracts. We test the trigger definition, the compensation mechanism and whether it restores the same economic position, the timeline for adjudication, force majeure allocation including grid and land events, and the termination compensation payable on offtaker default — including whether it covers outstanding debt and equity contribution, and whether lender step-in rights are recognised in a direct agreement.

Enforceability and dispute resolution

Governing law, seat and rules of arbitration, the appellate route through the regulator and APTEL, the realistic timeline to a recovered rupee, and the sponsor's willingness to enforce. Enforceability is not a legal formality; it is the difference between a contractual right and a collectible one.

What we treat as bankable

A bankable PPA in our review has an executed original, an adopted tariff, a functioning payment security package, defined curtailment compensation, a workable change-in-law route and a counterparty whose payment record supports the assumption. Anything short of that is priced as development risk, however attractive the headline tariff.