The Bihar Electricity Regulatory Commission (BERC) has released the draft Bihar Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2025.

The draft regulations are designed to govern tariff determination for renewable energy projects due for commissioning during the financial years 2025-26 to 2027-28.

Scope and Coverage

The draft regulations cover all renewable energy projects commissioned during the control period.

Tariff determination under these regulations applies to grid-connected generating stations, including biomass power projects based on Rankine cycle technology, non-fossil fuel-based cogeneration projects, solar, solar thermal, and floating solar projects, renewable hybrid energy and renewable energy with storage projects, biomass gasifier and biogas projects, municipal solid waste-based projects, and refuse-derived fuel-based projects.

Eligibility

For wind and small hydro projects, the key requirement is the use of new equipment, specifically new wind turbine generators for wind projects and new plant and machinery for small hydro. These projects must be situated at a site approved by the state nodal agency.

Projects utilizing biomass and non-fossil fuels have specific technological requirements. Biomass power projects utilizing Rankine cycle technology must employ new plant and machinery and cannot utilize any fossil fuels.

Non-fossil fuel-based cogeneration projects must also utilize new plant and machinery and operate in the topping cycle mode. For these projects, the sum of the useful power output and one-half of the useful thermal output must exceed 45% of the facility’s energy consumption during the crushing season.

Solar projects, including floating solar and solar thermal, must be based on technologies approved by the Ministry of New and Renewable Energy. A notable exception is that floating solar projects installed with an existing renewable energy project (other than ground-mounted solar) will be categorized as renewable hybrid energy projects.

Renewable hybrid energy projects themselves have a criterion that the rated capacity of generation from one renewable energy source must be at least 25% of the rated capacity of the other renewable energy sources that operate at the same point of interconnection.

Tariff Structure

The tariff structure for renewable energy projects will consist of return on equity, interest on loan, depreciation, interest on working capital, and operation and maintenance expenses. The tariff will be designed on a levelized basis over the useful life of the project, taking into account the year of commissioning.

The debt-equity ratio is fixed at 70:30 for both generic and project-specific tariff determinations. The loan tenure is assumed to be 15 years, with interest rates calculated 200 basis points above the average State Bank of India (SBI) marginal cost of funds-based lending rate (MCLR).

The normative return on equity is set at 14%. Depreciation will be allowed up to a maximum of 90% of the admitted capital cost with a 10% salvage value, at a rate of 4.67% per annum for the first 15 years, spread over the remaining life thereafter.

Working capital requirements will be computed based on O&M expenses, receivables, and maintenance spares. The interest rate on working capital is set at 325 basis points above SBI’s MCLR.

Rebate and surcharge provisions include a 1.5% rebate if payments are made within five days of presenting the bills, while late payments attract a surcharge of 1.5% per month if delayed beyond 45 days.

All renewable energy projects, except biomass and non-fossil fuel cogeneration facilities exceeding 10 MW, are categorized as “must-run” stations and are exempt from merit order dispatch principles. Excess generation beyond the approved capacity utilization factor can be sold, with the primary beneficiary retaining the first right of refusal.

Technology-Specific Parameters

For non-fossil fuel-based cogeneration projects, the capital cost is set at ₹56.2 million (~$653,488.37)/MW, with a PLF of 53%, auxiliary consumption of 8.5%, and a station heat rate of 3600 kCal/kWh.

For solar, floating solar, and solar thermal projects, capital costs will be determined on a project-specific basis. The minimum capacity utilization factor (CUF) is set at 19% for solar and floating solar, and 23% for solar thermal. Auxiliary consumption norms are 0.75% for solar and floating solar, and 10% for solar thermal.

For small hydro projects, the Commission will determine capital costs project-specifically. The CUF is 45%, auxiliary consumption is 1.5%, and normative O&M expenses for FY 2025-26 are fixed at ₹5.30 million (~$61,627.91)/MW, escalating at 3.84% annually.

In June this year, BERC approved tariffs ranging from ₹2.77 (~$0.032)/kWh to ₹3.48 (~$0.040)/kWh for 238.15 MW of solar power from grid-connected projects under Component C of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan program.

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