Quick Facts
What must-run status is
Must-run status is regulatory protection that prevents power plants from being curtailed by the grid except under strictly defined circumstances. For renewable energy plants in India (solar, wind, hydro, biomass), must-run status is essential to project economics because it ensures the grid accepts all generated electricity.
The status was formalised under the Electricity Act 2003 and strengthened by 2019 MNRE notifications. CERC and State Electricity Regulatory Commissions (SERCs) implement the framework through specific regulations.
For solar developers, must-run status provides legal protection against curtailment, with deemed generation compensation when curtailment does occur. This is critical to project economics and lender financing.
Legal framework
Must-run status in India rests on multiple legal foundations:
Electricity Act 2003: Establishes renewable priority and the regulatory framework.
National Electricity Policy: Articulates renewable promotion as policy.
National Tariff Policy: Defines tariff structures supporting renewables.
CERC Regulations: Central regulator’s framework for inter-state renewable dispatch.
SERC Regulations: State-level implementation. Each state regulator issues specific orders.
MNRE Notifications: Central renewable energy ministry guidelines, including the 2019 must-run notification.
State Grid Code: State-level grid operating rules, including must-run provisions.
PPA Documents: Specific must-run provisions in individual project contracts.
Tribunal and Court Orders: Judicial enforcement and clarification.
Together these establish a robust legal framework, though specific provisions vary across states.
Must-run scope
Must-run typically covers:
Solar PV plants: Utility-scale and rooftop.
Wind plants: Onshore and offshore.
Small hydro: Under 25 MW capacity.
Biomass: Bagasse, agricultural residue, MSW.
Geothermal: Where applicable.
Some specifically designated conventional plants under particular contracts.
Each plant’s must-run status is established through:
Connection agreement with grid operator.
PPA with off-taker.
State regulatory orders.
The combined framework defines specific must-run obligations.
When curtailment is permitted
Curtailment of must-run plants is permitted only in:
Grid security: Imminent threat to grid stability (frequency, voltage, blackout risk).
Force majeure: Natural disasters, transmission failures.
Scheduled maintenance: Pre-notified maintenance per defined procedures.
Force majeure events: Specifically defined.
Other curtailment is illegal and triggers compensation obligations under deemed generation.
Deemed generation compensation
When curtailment occurs despite must-run protection:
Calculation: Lost generation calculated based on pyranometer data, comparable plant performance, or forecast methods.
Compensation: Developer paid at PPA tariff for curtailed energy.
Documentation: Curtailment events documented by SLDC and developer.
Settlement: Through monthly bills or separate settlement.
Dispute resolution: SERC or APTEL.
Deemed generation provisions are critical to project economics and lender confidence.
Enforcement mechanisms
Must-run enforcement involves multiple layers:
SLDC (State Load Despatch Centre): First-line enforcement. Documents curtailment.
SERC: State regulator. Hears disputes and issues orders.
CERC: Central regulator. Inter-state matters.
APTEL: Appellate Tribunal for Electricity. Hears appeals from CERC/SERC.
Supreme Court: Constitutional issues and major disputes.
The enforcement chain has generally supported must-run protection, with notable cases reinforcing the framework.
Major must-run cases
Several cases have shaped Indian must-run jurisprudence:
Andhra Pradesh PPA renegotiation (2019): State attempted to renegotiate solar PPAs. APTEL and courts protected the original tariffs and must-run.
Tamil Nadu wind curtailment cases: Compensation enforcement.
Karnataka solar curtailment disputes: Regulatory clarifications.
Rajasthan solar park issues: Various enforcement matters.
These cases have reinforced must-run as a robust legal protection, though enforcement remains a vigilance issue.
Must-run and PPA structure
PPAs typically include:
Reference to applicable must-run regulations.
Deemed generation calculation methodology.
Compensation provisions.
Force majeure definition.
Dispute resolution forum.
Default and termination provisions.
For lender-grade PPAs, must-run provisions are carefully drafted to provide strong protection and ensure deemed generation compensation.
Common must-run issues
Despite legal protection, real-world issues include:
Slow compensation: Curtailment compensation often delayed.
Incomplete documentation: Disputes about curtailment events.
Definitional disputes: What constitutes valid curtailment.
State government attempts to renegotiate: Occasional but typically defeated in courts.
Inadequate enforcement: Some states have slower enforcement.
Grid operator reluctance: Curtailment despite protections.
Active vigilance and engagement with regulators and courts is needed to maintain must-run protections.
Best practices
For developers:
Strong must-run provisions in PPAs.
Robust data infrastructure for curtailment quantification.
Engage with regulators and SLDCs.
Litigate when necessary.
Maintain compensation tracking.
For lenders:
Verify must-run protection in due diligence.
Strong PPA provisions.
Compensation track record review.
For grid operators:
Transparent curtailment processes.
Compliance with regulations.
Investment in grid capacity.
For regulators:
Clear guidelines and enforcement.
Timely dispute resolution.
Effective compensation mechanisms.
Future considerations
As Indian solar capacity grows toward 280 GW by 2030:
Higher renewable share increases potential conflict between must-run and grid stability.
Storage, demand response, and grid investments are essential to maintain must-run feasibility.
Regulatory frameworks may need refinement.
Greater coordination between central and state regulators.
International best practices for high-renewable grids will influence Indian framework evolution.
Standards and references
Must-run status is governed by Electricity Act 2003, MNRE guidelines (2019 notification particularly), CERC regulations, State Grid Codes, and SERC orders. Specific provisions are in PPA documents. APTEL and court orders provide judicial guidance. Lender’s diligence frameworks address must-run requirements.
Related glossary terms
Key takeaways
Must-run status is the regulatory protection requiring grids to accept generation from designated renewable plants (solar, wind, small hydro, biomass) without curtailment except under strictly defined technical circumstances. The framework rests on Electricity Act 2003, MNRE 2019 notification, CERC/SERC regulations, and State Grid Codes. When curtailment does occur, deemed generation provisions provide compensation at PPA tariff. Enforcement through SLDCs, SERCs, CERC, and APTEL has generally supported must-run protection. As Indian solar grows toward 280 GW by 2030, balancing must-run with grid stability will require continued investment in storage, demand response, and grid infrastructure.