CERC Announces Levelized Tariffs for Renewable Energy Sources for FY 2020-21

The Central Electricity Regulatory Commission (CERC) has issued levelized generic tariffs for renewables for the financial year (FY) 2020-21.

The Commission had issued another order last month, which provided the terms and conditions for determining tariffs for renewable energy projects.

The project-specific tariff will apply to solar PV projects, floating solar projects, solar thermal, wind, and biogas power projects. It will also apply to municipal solid waste projects, renewable hybrid, and renewable projects with storage.

A useful life period of 25 years will apply to wind power projects, biomass projects with Rankine cycle technology, solar projects, floating solar, and solar thermal projects. Similarly, the useful life period of municipal solid waste-based projects, biomass gasifier-based projects, and renewable hybrid energy projects will also be 25 years. The useful life period of small hydro projects has been set at 40 years.


The Commission approved the debt-equity ratio of 70:30 in line with the approach adopted in the tariff regulations. The return on equity has been fixed at 16.96% for the first 20 years and 21.52% after 20 years of useful life.

The rate of depreciation for the first 15 years was specified as 4.67%, and the rate of depreciation from the 16th year onwards would be spread over the remaining useful life of the renewable energy project.

For small hydro projects, the rate of depreciation from the 16th year on wards has been fixed at 0.80%, and for biomass projects, it has been fixed at 2%. Similarly, for non-fossil fuel co-generation projects, the rate of depreciation has been fixed at 2%, and it is the same for biomass gasifiers and biogas-based projects.

Operation and Maintenance Expenses

As per the order, the operation and maintenance (O&M) expenses for the FY 2020-21 will be increased at the rate of 3.84% per year for the tariff period.

For hydropower projects below 5 MW in Himachal Pradesh, Uttarakhand, West Bengal, the union territory of Jammu and Kashmir, the union territory of Ladakh and north-eastern states, the O&M expenses for FY 2021 has been determined as ₹4.17 million (~$55,947)/MW.

For projects in the range of 5 MW and 25 MW, the O&M expenses have been set as ₹3.13 million (~$41,994)/MW.

Similarly, for other states, the O&M cost for projects below 5 MW has been taken as ₹3.36 million (~$45,080)/MW, and for projects in the range of 5 MW to 25 MW, the O&M cost is set as ₹2.43 million (~$32,602)/MW.

The O&M expenses for biomass-based projects for the first year of the control period (FY 2020-21) will be ₹4.64 million (~$62,253)/MW, and for biomass gasifier power projects, it will be ₹6.13 million (~$82,244)/MW. Similarly, for biogas, this would be ₹6.13 million (~$82,244)/MW for the first year of the control period (FY 2020-21).

Capital Cost

The net capital cost for small hydropower projects, biomass projects, non-fossil fuel co-generation projects, biomass gasifier-based projects, and biogas power projects:

CERC Debt and Equity Components of the Normative Capital Cost

For small hydro projects in Himachal Pradesh, Uttarakhand, West Bengal, the union territory of Jammu and Kashmir, the union territory of Ladakh and north-eastern states, the capacity utilization factor (CUF) has been fixed at 45%. For other states, it has been fixed at 30%.

Levelized Tariff

The levelized tariff for small hydropower projects for FY 2021:

CERC Levelized Tariff

Levelized tariff for bagasse-based co-generation projects, biomass gasifier, and biogas-based projects:

Levelized Tariff for Bagasse Based Co Generation

Levelized tariff for Biomass Gasifier and Biogas Projects

In March this year, the CERC had extended the applicability of the Renewable Energy Tariff Regulations, 2017, for three months (from April 01, 2020, to June 30, 2020).The Commission had further noted that the generic tariff issued by the Commission in the order dated March 19, 2019, would continue to remain in force until June 30, 2020.

Earlier, CERC had issued a draft regulation for sharing inter-state transmission charges and losses.The Commission had stated that the regulations would apply to all the designated inter-state transmission system customers, inter-state transmission licensees, national load despatch center, regional load despatch centers, state load despatch centers, and regional power committees.