CERC Issues Draft Generic Renewable Energy Tariffs For Projects Commissioning In FY 2026-27

The Central Electricity Regulatory Commission (CERC) has issued a draft proposal for determining the levellised generic tariff for renewable energy projects to be commissioned between August 1, 2026, and March 31, 2027. Released on July 3, 2026, the proposal has been prepared under the CERC Renewable Energy Tariff Regulations, 2024. The Commission has invited stakeholders, developers and other interested parties to submit their comments and suggestions on the draft by July 21, 2026, before the tariffs are finalised.

The draft covers renewable energy technologies that are eligible for generic tariff determination. These include small hydro projects, biomass power projects based on Rankine Cycle technology, non-fossil fuel-based cogeneration projects, biomass gasifier-based power plants, biogas-based projects, and refuse-derived fuel (RDF)-based municipal solid waste (MSW) projects. However, solar, wind, hybrid renewable energy, and energy storage projects will continue to be governed through the project-specific tariff mechanism as provided under the existing regulations.

After reviewing current market conditions and tariff practices adopted by various State Electricity Regulatory Commissions, CERC has decided to retain the existing capital cost norms for all eligible renewable energy technologies. According to the Commission, the current benchmark capital costs remain broadly aligned with market conditions, and therefore no revision has been proposed for FY 2026-27.

The Commission has also retained the normative debt-equity ratio of 70:30 for tariff calculations. It has considered a loan interest rate of 10.71%, calculated using the average one-year SBI Marginal Cost of Funds Based Lending Rate (MCLR) plus 200 basis points. The post-tax return on equity remains unchanged at 15% for small hydro projects and 14% for all other eligible renewable energy technologies. The discount factor used for tariff calculations has been proposed at 9.38% for small hydro projects and 9.08% for the remaining technologies.

CERC has proposed to continue the existing useful life of renewable energy projects. Small hydro projects will have a useful life of 40 years, while biomass, biogas and cogeneration projects will continue with a 25-year life. RDF-based municipal solid waste projects will have a useful life of 20 years. The annual escalation rate for operation and maintenance expenses has also been retained at 5.25%. In addition, biomass and bagasse fuel prices have been revised upward by applying an annual escalation factor of 3.45% over the values adopted during the first year of the current control period.

Under the proposed tariffs, small hydro projects located in Himachal Pradesh, Uttarakhand, West Bengal, Jammu & Kashmir, Ladakh and the North Eastern States have been assigned a levellised tariff of ₹6.69 per kWh for projects below 5 MW and ₹6.02 per kWh for projects between 5 MW and 25 MW. For projects located in other states, the proposed tariffs are ₹7.70 per kWh for capacities below 5 MW and ₹7.49 per kWh for projects between 5 MW and 25 MW.

For biomass-based power projects, the proposed tariffs vary according to technology, fuel type and cooling system, generally ranging between ₹9.5 and ₹11.6 per kWh before accelerated depreciation adjustments. Biomass gasifier-based projects have proposed tariffs ranging from around ₹9.3 to ₹10.5 per kWh, while biogas-based power projects have been assigned a tariff of ₹11.17 per kWh. RDF-based municipal solid waste projects have been proposed a tariff of ₹10.69 per kWh, which reduces to ₹10.14 per kWh after considering accelerated depreciation benefits.

The Commission has also clarified that any subsidy, grant or incentive received from the Central or State Government that has not been considered while determining tariffs will be adjusted in future tariff payments. After reviewing the feedback received during the consultation process, CERC is expected to issue the final generic renewable energy tariff order for FY 2026-27.