CERC Initiates FY 2026–27 Generic Tariff Determination For Renewable Energy Projects

The Central Electricity Regulatory Commission (CERC) has initiated a suo motu proceeding under Petition No. 12/SM/2026 to determine the levellised generic tariffs for renewable energy projects for the financial year 2026–27. The proceeding has been initiated under Regulation 8 of the CERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2024.

The exercise is aimed at establishing the financial and operational parameters required to calculate generic tariffs for the third year of the current control period. These tariffs provide a standard benchmark for renewable energy projects where project-specific tariff determination is not required.

The generic tariff framework primarily covers small hydro, biomass, biogas and other small-scale renewable energy projects. Through the proceeding, CERC will assess and establish key parameters such as capital costs, operation and maintenance expenses, interest on working capital, depreciation, and return on equity. These parameters will form the basis for determining the applicable tariffs for renewable power projects during FY 2026–27.

While finalising the benchmark parameters, the Commission is expected to consider prevailing market conditions and changes in project economics. Factors such as inflation, capital expenditure requirements, financing costs and other macroeconomic indicators are important considerations in updating the cost assumptions for different renewable energy technologies.

The generic tariff mechanism is intended to provide greater transparency and consistency in renewable power procurement. By establishing technology-specific benchmarks, the framework can reduce uncertainty for developers and provide a regulatory reference for utilities and other stakeholders involved in renewable energy procurement.

The determination of tariffs is also expected to balance the interests of renewable energy developers, electricity distribution companies and consumers. Appropriate tariff levels can help developers achieve reasonable returns on investment while preventing excessive costs from being passed on to electricity consumers.

For smaller renewable energy projects, predictable tariff structures can play an important role in improving investment visibility. Clear regulatory benchmarks may also support project financing and facilitate the development of distributed and small-scale renewable generation capacity.

The CERC proceeding will therefore serve as an important regulatory step for the renewable energy sector for FY 2026–27. Once the applicable parameters and generic tariffs are finalised, they can provide a reference for state electricity regulatory commissions, distribution utilities and project developers while structuring renewable power purchase arrangements.

The exercise comes as India continues to expand its renewable energy capacity and diversify its clean energy portfolio. By updating generic tariffs in line with current project costs and economic conditions, CERC aims to maintain regulatory certainty while supporting continued investment in smaller renewable energy projects.