Context & Purpose
Issued by Central Electricity Regulatory Commission (CERC).
Applicable for the control period 01.07.2025 – 31.03.2028.
Covers tariff determination methodology for renewable energy projects under Section 61(h) of the Electricity Act, 2003.
Objective: promote RE investments while ensuring consumer interests.
Applicability
Grid-connected Solar PV, Solar Thermal, Wind (Onshore & Offshore), Small Hydro (≤25 MW), Biomass (Rankine Cycle, Gasifiers, Bagasse Cogeneration), MSW/RDF, and Hybrid Projects.
Excludes projects discovered under competitive bidding (only generic tariff projects covered).
Tariff determination: Generic Tariff (suomotu by CERC) and Project-specific Tariff (on petition).
Tariff Principles
Tariff Period: 25 years (except SHP – 35 years).
Tariff Components: Return on Equity (RoE), Interest on Loan (IOL), Depreciation, O&M Expenses, Interest on Working Capital, Auxiliary Consumption (where applicable).
Discount Rate: 10% for NPV calculations.
Financial Norms
Debt-Equity Ratio: 70:30.
RoE: Pre-tax 16% (grossed up with MAT/Tax rate).
Depreciation: 4.67% p.a. for first 15 years, balance over remaining useful life.
Loan Tenure: 15 years, repayment through equal annual installments.
Working Capital: Normative formula defined for each RE technology.
Technology-specific Norms
Solar PV
CUF: 19% (normative).
Capital Cost: ₹3.8 crore/MW.
O&M: ₹7 lakh/MW (with 3.84% escalation).
Degradation: 0.75% p.a.
Wind (Onshore)
CUF linked to wind zones (Zone I–V).
Capital Cost: ₹6.2 crore/MW.
O&M: ₹10 lakh/MW.
Solar Thermal
CUF: 23%.
Capital Cost: ₹12 crore/MW.
O&M: ₹20 lakh/MW.
Small Hydro (≤25 MW)
Capital Cost: Zone-wise (₹8–10 crore/MW).
CUF: 40%.
O&M: 4% of capital cost.
Biomass (Rankine Cycle, Gasifiers, Bagasse)
Fuel cost indexed annually.
CUF: 80%.
Capital Cost: ₹6.5 crore/MW.
MSW / RDF
CUF: 65%.
Capital Cost: ₹12 crore/MW.
O&M: 7% of capital cost.
Regulatory Process
Draft issued for public consultation.
Stakeholders invited to submit comments/suggestions before final notification.
Significance
Provides a benchmark tariff framework for RE projects outside competitive bidding.
Introduces updated capital cost and CUF norms reflecting current market conditions.
Supports hybrid & new technologies while maintaining investor confidence.
