Developer Due Diligence
Solar PPA Red Flags: The Clauses Your Deck Won't Flag
A developer's own proposal will not flag the clauses that protect the developer. That is the read we run.
Developer Due Diligence
A developer's own proposal will not flag the clauses that protect the developer. That is the read we run.
The dangerous risks in a solar PPA aren't in the headline tariff — they're in the clauses that only bite after you sign. Here are the red flags we pressure-test on every mandate, each one drawn from a real deal.
One state moved settlement from slot-wise to a 15-minute level after a PPA was signed — cutting offtake 20% and dropping a CFO's savings from ₹24 Cr to ₹19.2 Cr. Your model must stress-test banking rules, not assume they're fixed.
Maharashtra's MERC FY25-26 order cut contractable capacity ~50% and savings ~10% — and it hit existing PPAs, not just new ones. A fair PPA needs a clear transition window.
A 3% annual escalator turns a ₹4.00 year-one tariff into about ₹7.01 by year 20 — a 75% rise. Always model the escalation to the end of the term.
Deemed-generation clauses, the SSSHA risk, cross-subsidy surcharge and FPPCA exposure can each quietly erode the saving the deck promised. These are the clauses a developer has no incentive to flag.
Benchmark the tariff (so you know the number is fair) and pressure-test the clauses (so the saving survives). Start with the PPA Index, see whether your tariff is fair, or get an independent PPA review. Real examples: the ₹32 Crore PPA trap and is a 25-year PPA an asset or a trap.
Benchmark the tariff and check the clauses before you sign a 25-year contract.
Check the PPA Index →The answers, straight.
Uncapped escalation, post-signing banking-regulation changes, retrospective state tariff orders, and deemed-generation, SSSHA and cross-subsidy clauses that erode savings after signing.
Yes. Regulatory changes to banking rules or tariffs can reduce offtake and savings even after the PPA is signed, which is why clause-level due diligence is essential before committing.
Benchmark the tariff against SECI/CERC auction bands, then pressure-test the contract clauses (escalation, banking, deemed generation, SSSHA, CSS). A PPA advisory does both.
Cross-subsidy surcharge and additional surcharge are revised by state regulators, banking rules can tighten, and wheeling and transmission charges change with every tariff order. A PPA that is silent on this movement quietly hands the risk to you — cap it in the contract.