SEBI Clarifies Renewable Energy Projects Awarded Through Competitive Bidding Qualify As PPPs

The Securities and Exchange Board of India (SEBI) has provided an important clarification that renewable energy projects awarded through competitive bidding processes can be treated as Public-Private Partnership (PPP) projects under existing regulations. The clarification was issued through an interpretive letter in response to a request from Sustainable Energy Infra Investment Managers Private Limited, which manages the Sustainable Energy Infra Trust (SEIT).

The company had approached SEBI seeking clarity on whether solar and wind energy projects awarded through competitive bidding by government-linked entities qualify as PPP projects under the SEBI (Infrastructure Investment Trusts) Regulations, 2014. The request focused on projects where public sector organizations act as power purchasers and private developers are responsible for developing and operating the assets.

While reviewing the matter, SEBI examined the structure of renewable energy projects and compared them with the requirements outlined in the InvIT Regulations. The regulator noted that the Ministry of Finance includes electricity generation, transmission, and distribution in its harmonized master list of infrastructure sub-sectors. Based on this classification, renewable energy projects fall within the definition of infrastructure projects under the relevant regulations.

SEBI also reviewed the role of public authorities such as the Solar Energy Corporation of India (SECI), NTPC, NHPC, and various state-owned electricity distribution companies. In most cases, these entities act as offtakers of power generated by private renewable energy developers. The projects are generally held through Special Purpose Vehicles (SPVs), which are often part of an Infrastructure Investment Trust structure.

According to SEBI, the selection of private developers through transparent and competitive tariff-based bidding processes satisfies one of the key conditions required for PPP classification. The regulator observed that these bidding mechanisms ensure fair competition and transparent project allocation.

Another important factor considered by SEBI was the long-term Power Purchase Agreement (PPA) signed between the public authority and the private developer. These agreements typically have a tenure of up to 25 years and clearly define the rights and obligations of both parties. The PPAs also establish risk-sharing arrangements and include operational and performance standards that developers must meet. Penalties are generally specified for failure to comply with agreed terms and conditions.

After reviewing all these aspects, SEBI concluded that renewable energy projects awarded by public entities through open competitive bidding or Memorandum of Understanding (MoU) arrangements satisfy the conditions laid out under Regulation 2(1)(zm) of the InvIT Regulations. As a result, such projects can be classified as PPP projects.

The clarification is expected to provide greater regulatory certainty to investors, developers, and Infrastructure Investment Trusts operating in the renewable energy sector. By recognizing these projects as PPPs, SEBI has helped strengthen the framework for private investment in public infrastructure while supporting the continued growth of India’s renewable energy industry. The regulator also allowed a 90-day confidentiality period before the interpretive letter was made publicly available.