Navigating India’s Renewable Energy Tariff Regulations Insights From CERC

In exercise of its authority under the Electricity Act, 2003, the Central Electricity Regulatory Commission (CERC) has introduced regulations on tariff determination from renewable energy sources. These regulations, effective from April 1, 2024, until March 31, 2027, apply to grid-connected generating stations relying on renewable energy.

The eligibility criteria for projects under these regulations are stringent. They encompass various renewable energy sources, including wind power, small hydro, biomass, solar PV, floating solar, solar thermal, renewable hybrid energy, renewable energy with storage, biomass gasifier, biogas, municipal solid waste, and refuse-derived fuel projects. To qualify, projects must adhere to specific conditions outlined for each category.

The Control Period, spanning from April 1, 2024, to March 31, 2027, dictates the validity of tariffs determined under these regulations. Tariffs set during this period will remain applicable until the end of the tariff period. Furthermore, tariff norms specified in the regulations will persist until revised through subsequent re-enactments.

CERC determines generic tariffs annually for various renewable energy projects, including small hydro, biomass power, non-fossil fuel-based cogeneration, biomass gasifier, biogas, municipal solid waste, and refuse-derived fuel projects. These tariffs remain valid for projects commissioned within the same year, ensuring stability and predictability in the renewable energy sector.

The regulations also outline procedures for determining project-specific tariffs, including the submission of petitions accompanied by prescribed fees. Tariffs for projects with fuel cost components, such as biomass power, are bifurcated into fixed and fuel cost components, ensuring transparency and fairness in pricing.

For projects generating excess energy beyond specified capacity utilization factors, provisions allow for the sale of surplus energy to other entities, with priority given to concerned beneficiaries. Tariffs for excess energy are determined based on the applicable tariff for the year.

Capital costs, inclusive of land, pre-development expenses, and financing costs, are determined considering prevailing market trends. Minimum capacity utilization factors for various renewable energy projects are established, ensuring optimal performance and efficiency.

Renewable hybrid energy projects, combining multiple renewable sources, are subject to specific capacity utilization factor requirements. Tariffs for these projects are computed on a levelized basis, factoring in the useful life of each renewable energy technology.

For renewable energy with storage projects, the efficiency of storage components is crucial. Tariffs for such projects may be composite or differential, based on the time of day or other agreed-upon parameters. The regulations empower CERC to relax provisions under special circumstances and address any difficulties arising from their implementation. These regulations provide a structured framework for tariff determination from renewable energy sources, promoting transparency, consistency, and sustainability in India’s renewable energy sector.

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