CERC Announces New Tariff Regulations for Renewable Energy Projects

The Central Electricity Regulatory Commission (CERC) has come up with tariff regulations for renewable energy projects. These regulations will come into force from July 01, 2020, and will be valid until March 31, 2023.

The draft regulations were published in May 2020.

The project-specific tariff will apply to solar 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 has considered a debt and equity ratio of 70:30, and the return on equity will be 14%. The depreciation rate of 4.67% per year has been adopted for the first 15 years, and the remaining depreciation will be evenly spread during the remaining useful life of the project.

As per the order, the operation and maintenance (O&M) expenses for the financial year (FY) 2020-21 will be increased at the rate of 3.84% per year for the tariff period. A late payment surcharge of 1.50% per month will be levied by the generating company if the payment is delayed beyond 45 days from the date of the presentation of the bill.

Wind Projects

In its order, the Commission has stated that the capacity utilization factor (CUF) will be 22% for annual mean wind power density up to 220 W/m2, and it will be 24% in the range of 221-275 W/m2. Similarly, the CUF for annual mean wind power density in the range of 276-330 W/m2 will be 28%, and it will be 33% for 331-440 W/m2. For average mean wind power density above 440 W/m2, CUF will be 35%.

Solar Projects

The Commission will determine only project specific capital cost considering the existing market trends.

The minimum CUF for solar power projects will be 21%, and the minimum CUF for solar thermal power projects is 23%. Similarly, the minimum CUF for floating solar projects is 19%.

The Commission will approve auxiliary consumption for a project-specific tariff if the following conditions are fulfilled:

  • The maximum auxiliary consumption for solar power projects is 0.75%
  • The maximum auxiliary consumption for solar thermal power projects is 10%
  • The maximum auxiliary consumption for floating solar projects is 0.75%

Small Hydro Projects

For small hydro projects of capacity below 5 MW, the capital cost will be ₹110 million (~$1.46 million)/MW in Himachal Pradesh, Uttarakhand, West Bengal, Jammu and Kashmir, Ladakh, and north eastern states, while it will be ₹78 million (~$1.03 million)/MW in other states. For small hydro projects of capacity in the range of 5 MW to 25 MW, the capital cost will be ₹110 million (~$1.46 million)/MW in Himachal Pradesh, Uttarakhand, West Bengal, Jammu and Kashmir, Ladakh, and north eastern states. In other states, it would be ₹90 million (~$1.19 million)/MW.

CERC - Normative capital cost considered for small hydro projects for FY 2020-21

The O&M expenses for the FY 2020-21 for projects below 5 MW will be ₹4.18 million (~$55,363)/MW in Himachal Pradesh, Uttarakhand, West Bengal, Jammu and Kashmir, Ladakh, and the north eastern states. For other states, it will be ₹3.3 million (~$43,707)/MW. Similarly, for projects in the range of 5 MW to 25 MW, the O&M expenses would be ₹3.1 million (~$41,058)/MW in Himachal Pradesh, Uttarakhand, West Bengal, Jammu and Kashmir, Ladakh and the north eastern states. For other states, it will be ₹2.4 million (~$31,787)/MW.

Biomass Power Projects with Rankine Cycle Technology

For biomass with Rankine cycle project (other than rice straw and Juliflora-based project) with a water-cooled condenser, the capital cost will be ₹55.9 million (~$740,385)/MW. For a project other than rice straw and Juliflora with an air-cooled condenser, the capital cost will be ₹60 million (~$794,689)/MW. For rice straw and Juliflora (plantation)-based project with a water-cooled condenser, the capital cost will be ₹61.1 million (~$809,258)/MW. For rice straw and Juliflora (plantation)-based project with an air-cooled condenser, the capital cost will be ₹65.2 million (~$863,562)/MW.

CERC - Normative capital cost considered for biomass power projects based on rankine cycle technology for FY 2020-21

The O&M expenses for the first year of the control period (FY 2020- 21) will be ₹4.6 million (~$60,926)/MW.

 Biogas-Based Power Projects

The capital cost for biogas-based power projects is set at ₹118.6 million (~$1.57 million)/MW for the FY 2020-21, and the plant load factor will be considered as 90% for the determination of tariff. The O&M expenses for the first year of the control period (FY 2020- 21) will be ₹6.13 million (~$81,190)/MW.

Renewable Hybrid Energy Projects

The capital cost will be determined on a project-specific basis, considering the prevailing market trends. The Commission will determine only project-specific CUF for renewable hybrid energy projects based on the proportion of rated capacity of each renewable energy source.

The minimum capacity utilization factor for renewable hybrid energy projects will be 30% when measured at the interconnection point, where the energy is injected into the grid.

Renewable Energy with Storage Projects

The Commission stated that it would determine only project-specific capital costs for renewable energy with storage projects as per the market trends. The minimum efficiency for storage based on solid-state batteries should be 80%, and the minimum efficiency for storage based pumped storage should be 75%.

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

Recently, CERC also issued draft regulations for sharing inter-state transmission charges and losses for renewable energy projects.