The Tamil Nadu Electricity Regulatory Commission (TNERC) has issued a draft notification for the Terms and Conditions for Determination of Tariff from Non-Conventional Energy Generation Sources Regulations, 2026. Released on June 1, 2026, the proposed regulations are aimed at creating a clear framework for determining tariffs for renewable energy projects in the state. TNERC has invited comments and suggestions from stakeholders and the public, with submissions accepted until June 16, 2026.
The regulations will come into effect after their publication in the Tamil Nadu Government Gazette and will remain applicable during a five-year control period from April 1, 2027, to March 31, 2032. The framework will apply to all new grid-connected renewable energy projects commissioned during this period. Covered technologies include solar power, onshore wind energy, small hydro projects, biomass-based generation, biogas plants, and municipal solid waste-based power projects.
According to the draft, renewable energy procurement will normally take place through competitive bidding. However, in cases where bidding is not feasible or market conditions are unsuitable, TNERC may determine tariffs through a cost-plus mechanism. This provision is expected to be relevant for projects such as bagasse-based cogeneration units linked to sugar mills.
The commission has also proposed granting “Must Run” status to all renewable energy projects covered under the regulations. This means that these projects will not be subject to merit order dispatch restrictions and will receive priority in power scheduling.
For tariff determination, TNERC has adopted a standard debt-equity ratio of 70:30. Most renewable energy technologies will follow a single-part tariff structure based on levelized fixed costs. Fuel-based renewable technologies such as biomass and bagasse cogeneration projects will follow a two-part tariff structure consisting of fixed charges and fuel cost components.
For FY 2027-28, utility-scale solar projects above 1 MW have been assigned a capital cost of ₹400 lakh per MW and a Capacity Utilization Factor (CUF) of 23%, resulting in a proposed tariff of ₹3.19 per kWh. Floating solar projects have been assigned a tariff of ₹3.74 per kWh.
Onshore wind projects have been assigned a capital cost of ₹650 lakh per MW, a CUF of 32%, and a tariff of ₹3.55 per kWh. Bagasse-based co-generation projects have been proposed a tariff of ₹7.47 per kWh, while municipal solid waste projects have been assigned ₹6.94 per kWh.
For small hydro projects, the tariff is proposed at ₹8.17 per kWh for capacities below 5 MW and ₹6.94 per kWh for projects up to 25 MW. The regulations also define project life and PPA tenure, ranging from 20 years for waste-to-energy projects to 40 years for small hydro plants. Any generation beyond the normative CUF will be compensated at 75% of the approved tariff.
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