HPERC Sets Solar Tariffs For 2026-27 Balancing Developer Costs And Consumer Interests In Himachal Pradesh

The Himachal Pradesh Electricity Regulatory Commission (HPERC) has issued a new order fixing the generic levellised tariffs for solar photovoltaic (PV) projects for the financial year 2026–27. The decision applies to solar projects with capacities of up to 5 MW and aims to balance the interests of project developers and electricity consumers in the state.

The order was passed under the leadership of Chairman Yashwant Singh Chogal and Member Shashi Kant Joshi after a detailed public consultation process. Various stakeholders, including the State Government, the Directorate of Energy (DoE), developers, and consumer representatives, participated and shared their views before the final decision was made.

During the consultation, developers highlighted the challenges of setting up solar projects in Himachal Pradesh’s hilly terrain. They pointed out that construction costs are higher due to difficult geography, expensive civil works, and higher transportation expenses for equipment. On the other hand, consumer groups argued that tariffs should remain low and closer to national average solar tariffs, which are around ₹2.52 per unit.

After considering all views, the Commission finalized tariffs based on project size and location. The tariffs are divided into three capacity categories and two types of areas—rural and urban or industrial. For projects up to 1 MW, the tariff has been set at ₹3.47 per unit in rural areas and ₹3.52 per unit in urban and industrial areas. For projects above 1 MW and up to 3 MW, the tariff is ₹3.40 per unit in rural areas and ₹3.46 per unit in urban and industrial areas. For projects above 3 MW and up to 5 MW, the tariff is ₹3.34 per unit in rural areas and ₹3.40 per unit in urban and industrial areas.

To arrive at these tariffs, the Commission fixed a base capital cost of ₹335.79 lakh per MW for larger projects. Smaller projects were given some cost relief to account for their higher per-unit costs. Projects up to 1 MW were given an additional 5 percent cost allowance, while projects up to 3 MW received a 2.5 percent increase. In addition, projects located in urban or industrial areas were given an extra ₹7.50 lakh per MW to encourage development closer to demand centers.

The Commission retained key technical assumptions while calculating tariffs. The Capacity Utilization Factor (CUF) has been kept at 21 percent, despite requests from developers to lower it due to weather conditions in the Himalayan region. This decision was taken to promote the use of efficient solar technologies. Operation and maintenance costs have been fixed at ₹10.96 lakh per MW, with an annual increase of 3.84 percent.

Financial assumptions include a debt-to-equity ratio of 70:30. The interest rate on loans has been set at 10.80 percent, while the return on equity is fixed at 14 percent. The useful life of solar projects has been considered as 25 years, and the same period has been taken for tariff calculation.

The order also includes a royalty provision. Projects with a capacity above 1 MW will be required to pay a royalty of 5 paise per unit to the State Government. However, these tariffs will not apply to rooftop solar systems under net metering or to projects larger than 5 MW, which will be awarded through competitive bidding.

This tariff order will be applicable to solar projects for which joint petitions for Power Purchase Agreements are filed between April 1, 2026, and March 31, 2027.