The Central Electricity Regulatory Commission (CERC) has released a draft proposal for determining the levellised generic tariff for renewable energy projects commissioned between August 1, 2026, and March 31, 2027. This proposal, released on July 3, 2026, is a significant development in India's renewable energy sector, offering insights into the future of clean energy pricing and policy. The draft proposal, prepared under the CERC Renewable Energy Tariff Regulations, 2024, covers a wide range of renewable energy technologies, including small hydro projects, biomass power projects, 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.
One of the key aspects of the draft proposal is the retention of 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. This decision suggests a commitment to maintaining a stable and predictable regulatory environment for renewable energy developers, which is crucial for attracting investment and fostering innovation.
Another notable feature of the proposal is the retention of the normative debt-equity ratio of 70:30 for tariff calculations. The Commission has also 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. These financial parameters are essential for ensuring the financial viability of renewable energy projects and maintaining a fair and consistent approach to tariff determination.
The draft proposal also retains the useful life of renewable energy projects, with small hydro projects having 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%. Additionally, 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.
The proposed tariffs for small hydro projects vary depending on the location and capacity. 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. This ensures that the tariffs are fair and reflective of the actual costs and benefits associated with renewable energy projects.
In conclusion, the CERC's draft proposal for determining the levellised generic tariff for renewable energy projects commissioned between August 1, 2026, and March 31, 2027, is a significant step forward in India's transition to a clean energy economy. The proposal provides a stable and predictable regulatory environment for renewable energy developers, ensuring the financial viability of projects and fostering innovation in the sector. As the Commission reviews feedback and finalizes the tariffs, the renewable energy sector in India is poised for continued growth and success.
