The Haryana Electricity Regulatory Commission (HERC) has issued the terms and conditions for determining tariffs for renewable energy projects, renewable purchase obligations, and renewable energy certificates.

The regulations will come into force on April 1, 2026, and remain in effect until March 31, 2029.

These regulations will apply to all grid-connected renewable energy projects and obligated entities in Haryana.

The obligated entities comprise distribution licensees and open access consumers.

Eligibility

A wind project will be considered a renewable energy project under these regulations if the project uses new wind turbine generators. The wind project may be offshore or onshore.

Solar projects must use technologies approved by the Ministry of New and Renewable Energy and the Haryana Renewable Energy Development Agency (HAREDA).

Floating solar projects installed with existing renewable energy projects (excluding ground-mounted solar projects) will be treated as renewable hybrid energy projects.

A hybrid project must comprise at least 33% of other renewable energy sources and operate at the same point of interconnection to be considered as a renewable energy project.

Additionally, both renewable energy sources under the hybrid arrangement must be injected into the grid at the same interconnection point, and metering must also be done at a common interconnection point.

A renewable project with an energy storage system must be connected to the same point of interconnection.

Determination of Tariff

For a renewable energy project, the tariff will be a single-part tariff comprising return on equity capital, interest on loan capital, depreciation, interest on working capital, and operation and maintenance (O&M) expenses.

All renewable energy projects, except for biomass projects, with an installed capacity of at least 10 MW, will be treated as must-run projects.

Tariff Calculation

The generic tariff will be determined for the entire tariff period or the project’s useful life.

For calculating the project-specific tariff and levelized tariff, the discount factor equivalent to the weighted average cost of capital {Term Loan and Return on Equity} will be considered.

The discount factor in the levelized generic tariff will be the weighted-average cost of capital.

Capital Cost

The capital cost will include all capital work, including plant and machinery, initial spares, civil work, and the project’s erection and commissioning.

It will also cover financing and interest during construction, and evacuation infrastructure up to the interconnection point.

The capital subsidy will not include the grant, incentive, or subsidy issued by the government.

If the land for the project is acquired on a lease basis, the lease cost will be included in the capital cost.

Debt Equity Ratio

The normative debt ratio for the determination of the generic tariff will be 70:30. For a project-specific tariff, if the equity deployed exceeds 30% of the capital cost, the equity exceeding 30% will be treated as a normative loan.

The debt-to-equity ratio will be calculated after deducting the grant or capital subsidy received for the project.

Loan and Finance Charges

The loan tenure for the renewable project will be considered as 15 years. The normative interest rate will be the average marginal cost of funds-based lending rate (one-year tenor) of State Bank of India prevailing during the last six months, plus a margin of up to 200 basis points.

The year of loan repayment will be considered as the first year of the project’s commercial operation and will equal the annual depreciation allowed for the project.

Depreciation

Depreciation will be allowed up to 90% of the project’s capital cost. The depreciation will exclude the grant or subsidy received for the project. The depreciation rate for the first 15 years, or 10% of the capital cost during the tariff period, will be 4.67% per annum, charged on the capital cost, and the remaining depreciation will be spread over the project’s remaining useful life from the 16th year onwards.

If the project is commissioned for only part of the year, depreciation will be charged on a pro rata basis.

Return on Equity

The value base for calculating equity eligible for return will be the lower of the two: 30% of the capital cost or actual equity invested in the project.

The normative return on equity will be calculated based on 14% of normative equity capital/per annum, and the corporate tax allowed.

Interest on Working Capital

The interest on working capital will be determined at the average marginal cost of funds-based lending rate (MCLR) (one-year tenor) of SBI prevailing over the last available six months, plus an appropriate margin not exceeding 200 basis points.

For renewable hybrid energy projects, the working capital requirement will be the sum of the working capital requirements for the different renewable energy sources.

The working capital requirements will comprise the following:

• O&M expenses for one month
• Receivables equivalent to 45 days of fixed charges and energy charges on the electricity sold on the normative capacity utilization factor of the project
• Maintenance spares will be calculated at 15% of O&M expenses

O&M Expenses

The O&M expenses will be determined for the tariff period based on normative O&M expenses. Normative O&M expenses will escalate 3.45% per annum over the tariff period.

Carbon Credits

The proceeds from Clean Development Mechanism (CDM) carbon credits will be shared between the generating companies and the beneficiaries.

The project developers will retain up to 100% of the gross proceeds from the CDM benefit for 12 months after the project’s commissioning.

From the second year, beneficiaries will receive carbon credits of up to 10%, which will increase by 10% each year until reaching 50%. Once the share of CDM benefits reaches 50%, the proceeds will be shared equally by the generating company and the beneficiaries.

Income Tax Benefits

If income tax benefits on accelerate depreciation are accounted for while determining the tariff, the assessment of benefit will be calculated by considering the following:

• On normative capital cost, accelerated depreciation rate, and corporate income tax rate
• Capitalization of renewable energy projects during the second half of the fiscal year
• Per unit benefit will be derived on a levelized basis at a discount factor equivalent to the weighted average cost of capital

Wind Projects

The capital cost will include the cost of the wind turbine generator and its auxiliaries, site development charges, other civil works, transportation charges, and evacuation costs up to the interconnection point.

It will also include financing charges and interest during construction. It will also include the cost of land as per the lease agreement.

The CUF for wind projects will range from 22% to 35% for annual mean wind power density between 220 W/m2 and above 441 W/m2, respectively.

Solar Projects

The minimum CUF for ground-mounted projects will be 21% with an AC: DC ratio of 1:1. The minimum CUF for floating solar projects will be 19%.

O&M expenses will be escalated at 3.45% per annum.

Auxiliary energy consumption will be calculated as 0.25% of gross generation.

The minimum CUF for a renewable hybrid project will be 30%.

Renewable Energy with Storage

The minimum efficiency for storage must be 80% and 75% for pumped storage projects.

The efficiency of the storage component for a renewable energy project with storage will be measured as the ratio of the energy output from storage to the energy input to the storage component, on an annual basis.

The tariff for renewable energy with storage can be blended and based on different time blocks. It can also be determined for supply on a round-the-clock basis or for a specific time period, as agreed by the project developer and the beneficiary.

RPO Obligation

Obligated entities can fulfill their renewable purchase obligations by generating or procuring renewable energy from a developer or another distribution company. It may also meet the RPO targets by purchasing a renewable energy certificate.

However, renewable power from other states cannot be considered as fulfilling the RPO in Haryana.

If the obligated entities fail to meet RPO targets, they must pay a sum equivalent to the shortfall in meeting those targets. The sum collected will be utilized by the Commission to purchase RECs.

An open access consumer who fails to meet RPO targets on or before April 30 of each financial year will not be allowed to procure power through open access until they meet their RPO targets.

Transmission Cost

The state transmission utility or the transmission licensee will bear the cost of setting up an extra-high-voltage/high-voltage transmission line up to 10 km from the interconnection point.

For transmission lines beyond 10km, the cost of setting up the infrastructure will be borne equally by the independent power producer (IPP) and licensee.
IPP projects for captive projects or merchant sales must bear the full cost of setting up the transmission infrastructure.

In June 2025, HERC issued regulations on the Deviation Settlement Mechanism and related matters. Stakeholders can submit their feedback by February 11, 2025.

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