The Supreme Court of India has held that Generation-Based Incentives (GBI) provided by the Union Government must remain a benefit for power generators and cannot be reduced from tariffs payable by distribution companies.
The bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar has observed that the schemes like GBI are crucial to attract investment in clean energy, enhance energy security and fulfill international climate obligations
The judgment came in a dispute between the Southern Power Distribution Company of Andhra Pradesh Limited and wind energy producers including Green Infra Wind Solutions Limited. The case centered on whether electricity regulators could factor in central government incentives while determining tariffs for renewable energy.
The controversy arose after the Andhra Pradesh Electricity Regulatory Commission (APERC) decided to deduct GBI amounts—granted by the Ministry of New and Renewable Energy—from tariffs payable to wind power generators. The incentive scheme was introduced to promote renewable energy by providing financial support based on actual electricity generation.
However, the Appellate Tribunal for Electricity overturned APERC’s decision, directing refund of deducted amounts along with interest. This led to an appeal before the Supreme Court.
The core issue before the Court was whether State Electricity Regulatory Commissions have the authority to consider and adjust government incentives like GBI while determining tariffs under the Electricity Act, 2003.
The Court clarified that while electricity regulators have exclusive and wide-ranging powers to determine tariffs, such powers must be exercised in harmony with policy objectives.
It held that regulatory commissions can consider incentives like GBI while determining tariffs. However, such consideration cannot defeat the purpose of the incentive scheme. GBI is designed as a generator-focused benefit, not a subsidy for consumers.
The Court emphasized that once the incentive is disbursed to generators, its purpose is fulfilled, and adjusting it against tariff payments would undermine national policy goals.
The Court stressed that regulators must adopt a “collaborative approach”, aligning tariff decisions with broader environmental and policy objectives rather than acting in isolation.
Dismissing the appeal filed by the Andhra Pradesh DISCOM, the Court upheld the APTEL ruling and confirmed that GBI must be paid over and above tariff. It cannot be deducted or adjusted while determining payable tariffs
Case Details
Case Title: Southern Power Distribution Company Of Andhra Pradesh Limited & Anr. Versus Green Infra Wind Solutions Limited & Ors.
Citation: JURISHOUR-516-HC-2026(Ker)
Case No.: CIVIL APPEAL NO. 4495 OF 2025
Date: 25/03/2026
