1. Meaning and concept

Time-of-Generation Value Pricing (TGVP) is a proposed electricity-pricing approach in which the price or compensation for electricity depends on the time it is generated and the value that electricity provides to the power system at that particular time.

For example, electricity generated during a period of peak demand may be more valuable than electricity generated when supply is abundant and demand is low. Similarly, solar electricity generated at midday may have a lower market value when many solar plants are producing simultaneously, but electricity available during the evening peak may be more valuable.

Important legal clarification: TGVP is not a universally standardized statutory term. It is best understood as an analytical framework connecting electricity generation timing with market value, time-sensitive tariffs, renewable-energy compensation and grid-balancing costs. The relevant legal rules vary by jurisdiction.

In India, the closest established legal and regulatory concepts include:

Time-of-Day (ToD) tariffs.

Market-based electricity prices and power exchanges.

Renewable-energy tariff determination.

Deviation settlement and grid balancing.

Electricity purchase agreements and compensation for generated electricity.

Ancillary services and flexibility procurement.

2. How TGVP works

The basic principle is that the value of one unit of electricity can vary according to when it enters the grid, the demand at that moment, available alternative generation, transmission constraints and the cost of maintaining system stability.

Electricity generation

Solar, wind, hydro, thermal or other sources

Time-specific system conditions

Demand, supply, congestion, flexibility and balancing needs

Value assessment

Market price, avoided costs, reliability value and applicable tariff rules

Generation compensation

Payment under the applicable market, tariff or contract

A key distinction is that the value of electricity and the amount a generator is legally entitled to receive are not necessarily the same. A regulated tariff or long-term power purchase agreement may determine payment even when the market price changes.

3. Illustrative mathematical model

A possible TGVP model can be expressed as:

\[ V_t = E_t \times P_t \]

where:

\(V_t\) = value of electricity generated during time period \(t\).

\(E_t\) = electricity generated, measured in kWh or MWh.

\(P_t\) = applicable value or price per unit during that period.

A more sophisticated model could distinguish energy-market value from other system benefits:

\[ P_t^{*}=P_t^{market}+R_t+B_t-C_t \]

Here, \(R_t\) represents a separately valued reliability benefit, \(B_t\) a separately valued balancing or flexibility benefit, and \(C_t\) relevant additional system costs. This is an illustrative analytical formula, not a statutory Indian tariff formula. Each component must be measured consistently, and benefits already reflected in the market price must not be counted twice.

Example: solar generator versus evening demand

Assume a solar plant generates 100 MWh at midday and a flexible generator supplies 100 MWh during the evening peak.

Illustrative generation-time value

The assumed evening price is three times the midday price; these are hypothetical figures, not current market quotations.

The example illustrates why generation timing may affect market value. It does not mean every evening generator must receive ₹6,000/MWh, or that a solar generator is automatically entitled to that amount. Actual payments depend on the applicable market rules, approved tariff, contract and dispatch arrangements.

4. Legal framework in India

The principal statute is the Electricity Act, 2003.

Section 61(d) addresses safeguarding consumers' interests while ensuring that electricity costs are recovered reasonably; Section 61(h) specifically addresses promotion of cogeneration and electricity generation from renewable sources.

Section 62(3) is especially relevant because it permits tariff differentiation on specified grounds, including load factor, voltage, consumption during a specified period and the time at which supply is required. This supports time-sensitive electricity tariff design, subject to the Act and applicable regulations. It does not, by itself, establish a general right to a generation-time premium.

5. Important case laws and their relevance

The following Indian judgments provide legal principles relevant to TGVP. None should be misrepresented as having expressly established a doctrine called “Time-of-Generation Value Pricing.”

Case 1: Southern Power Distribution Company of Andhra Pradesh Ltd. v. Green Infra Wind Solutions Ltd. & Ors. (2026)

Supreme Court of India · Civil Appeal No. 4495 of 2025 · Decided 25 March 2026 · 2026 INSC 294

Read the full judgment on Indian Kanoon

Facts: The dispute concerned whether a State Electricity Regulatory Commission could take account of a Generation-Based Incentive (GBI) granted by the Ministry of New and Renewable Energy when determining the tariff payable to renewable-energy generating companies.

Issue: Could the State Commission account for a government incentive in its tariff determination, or would doing so improperly interfere with the incentive scheme?

Decision and principle: The Supreme Court held that tariff determination remained within the exclusive province of the State Commission, which could consider the GBI while determining tariff, subject to the governing statutory principles and policy. The Court emphasized balancing energy security, consumer interests, generator viability and environmental concerns.

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Relevance to TGVP: This is particularly useful where a proposed pricing model combines generation-time compensation with renewable-energy incentives. It supports the proposition that regulators must assess relevant economic factors within their statutory powers rather than mechanically treating every incentive as irrelevant to tariff determination.

Limitation: The judgment concerns generation-based incentives, not a general rule requiring different prices for electricity generated at different hours.

Case 2: Gujarat Urja Vikas Nigam Ltd. v. EMCO Ltd. & Ors. (2016)

Supreme Court of India · Decided 2 February 2016

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Facts: The case concerned solar-power procurement and the applicable tariff framework under Gujarat's solar-energy tariff orders.

The regulatory framework distinguished tariff arrangements over the life of a solar project, including different rates for different periods.

Legal significance: The case illustrates how renewable-energy tariff orders and their governing contractual and regulatory conditions can determine the economic return to a generator.

Relevance to TGVP: A generation-time pricing model must distinguish between:

A tariff fixed by a regulatory order.

A tariff adopted through competitive bidding.

A market price that varies with the time of delivery.

A premium or incentive expressly authorized by law or contract.

A changing electricity market price does not automatically rewrite a previously approved tariff or power purchase agreement.

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Case 3: M/S Star Wire (India) Vidyut Pvt. Ltd. v. Haryana Electricity Regulatory Commission & Ors. (2019)

Supreme Court of India · Decided 2 July 2019

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Facts: The dispute involved amendments to Haryana's renewable-energy tariff regulations and the revision of norms for determining generic tariffs for a control period.

Legal significance: The case addresses the regulatory framework governing renewable-energy tariff determination and the challenge to amendments in that framework.

Relevance to TGVP: A regulator seeking to introduce generation-time differentiation should act under its statutory powers and applicable regulations. A new pricing methodology may require a valid regulatory amendment, a tariff order, or contractual authorization, depending on the existing framework.

A generator cannot assume that a proposed time-sensitive price automatically overrides the tariff rules applicable to its project.

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Case 4: Tata Power Renewable Energy Ltd. v. Union of India (2021)

Delhi High Court · Decision dated 22 June 2021

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Legal issue: The case considered the statutory framework governing renewable-energy procurement, regulatory jurisdiction and the role of competitive procurement arrangements.

Relevance to TGVP: Section 63 and the statutory procurement framework matter where a generator's compensation results from competitive bidding. A time-based premium or revised payment structure must be assessed against the applicable bidding conditions, adopted tariff and contract.

This case is useful for understanding the distinction between a general regulatory power to promote renewable energy and the specific legal mechanism governing a particular electricity purchase.

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Case 5: Energy Watchdog v. Central Electricity Regulatory Commission (2017)

Supreme Court of India · (2017) 14 SCC 80

Find the judgment and related records

Facts: The dispute involved power purchase agreements, increased fuel costs and claims for relief under contractual provisions and the law of force majeure.

Legal principle: Electricity pricing under a power purchase agreement must be interpreted in accordance with the contract and the governing legal framework. A change in economic circumstances does not automatically entitle a party to revise the agreed tariff.

Relevance to TGVP: If a generator agrees to a fixed tariff, it generally cannot demand an additional payment merely because electricity would have fetched a higher price during a peak-demand period. Whether the tariff can change depends on the agreement, applicable regulations and statutory powers.

This principle is important when designing time-sensitive contracts: the pricing formula, eligible hours, settlement method and adjustment provisions should be clearly defined from the outset.

6. Application to different electricity-generation technologies

Solar power

Midday solar generation can have lower marginal market value when solar supply is abundant. Storage, flexible demand and better transmission can help shift its economic value to later periods. Compensation remains subject to the applicable tariff and contract.

Wind power

Wind's value varies with the timing and predictability of wind production, system demand and other available generation. Forecasting and balancing arrangements can affect the overall economics.

Hydroelectric power

Reservoir-based hydro can sometimes shift generation to high-value hours, subject to water availability, environmental requirements and operating constraints. This flexibility can have value beyond the energy produced.

Thermal power

Dispatchable thermal plants may be valuable during periods of high demand or low renewable output. Start-up costs, fuel costs, minimum operating levels and ramping constraints must be considered.

7. Legal and regulatory challenges

A TGVP framework would need to address the following issues.

1. Tariff authority: Which regulator or market mechanism has legal authority to establish the time-dependent price?

2. Contractual certainty: Does an existing power purchase agreement permit hourly or interval-based settlement, or does it provide for a fixed tariff?

3. Non-discrimination: Are generators treated consistently under objective criteria, with differences justified by relevant system conditions?

4. Consumer protection: Could a time-based procurement premium increase retail tariffs, and how would those costs be justified?

5. Renewable-energy incentives: How should generation-linked subsidies, renewable purchase obligations and market revenue interact without double counting?

6. Measurement and settlement: Are generation intervals, metering data, forecasting errors and payment adjustments independently verifiable?

7. Grid reliability: Does the pricing method adequately account for transmission congestion, reserve requirements and the value of flexibility?

These questions require an assessment of the Electricity Act, applicable Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commission (SERC) regulations, market rules and the particular power purchase agreement.

8. How TGVP differs from related concepts

The distinction between generation and consumption is important. A time-of-day retail tariff may encourage consumers to shift their electricity use. TGVP, by contrast, examines the value and compensation associated with electricity generation. The two may be coordinated, but they are not legally interchangeable.

9. Practical framework for implementing TGVP in India

A legally robust implementation could follow these steps:

Define the objective. Decide whether the scheme aims to improve renewable integration, reduce peak procurement costs, reward flexibility or encourage investment.

Identify the legal authority. Determine whether implementation requires a market-rule change, a regulatory tariff order, a competitive-bidding mechanism or an amendment to the relevant contract.

Establish the pricing method. Specify time intervals, reference prices, any authorized premiums, settlement rules and safeguards against double counting.

Protect existing rights. Examine fixed tariffs, approved contracts, transition provisions and legitimate reliance on existing regulatory orders.

Assess public interest. Evaluate consumer costs, generator viability, renewable-energy objectives and system reliability.

Provide transparent review. Publish the methodology and periodically evaluate whether the pricing design achieves its stated objectives.

10. Conclusion

Time-of-Generation Value Pricing is a useful framework for understanding why electricity generated at different times can have different economic values. Its central insight is that the value of electricity depends not only on how much is generated, but also on when it is available and what the grid needs at that time.

The Indian legal position, however, requires a distinction between economic value and enforceable payment entitlement. Sections 61–63 and 86 of the Electricity Act, 2003, together with applicable regulations, market rules and power purchase agreements, determine how a proposed time-sensitive pricing mechanism may lawfully operate.

The most directly relevant recent authority discussed above is Southern Power Distribution Company of Andhra Pradesh Ltd. v. Green Infra Wind Solutions Ltd. (2026), because it addresses the relationship between renewable-energy incentives and regulatory tariff determination. It supports consideration of relevant economic factors by the regulator, but it does not establish a mandatory TGVP regime.

This is a general legal analysis, not legal advice for a particular tariff dispute. For litigation or regulatory submissions, the exact tariff order, PPA, applicable regulations and jurisdiction must be examined.