The Central Electricity Regulatory Commission (CERC) has issued a draft proposal for determining the levellised generic tariff for renewable energy projects to be 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, aiming to provide a clear and stable framework for investors and developers. The draft 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.
One of the key aspects of this proposal is the retention of existing capital cost norms for eligible renewable energy technologies. CERC has decided that the current benchmark capital costs remain broadly aligned with market conditions, and therefore no revision has been proposed for FY 2026-27. This decision provides a stable and predictable environment for investors, ensuring that the costs associated with renewable energy projects remain consistent and manageable.
The Commission has also retained the normative debt-equity ratio of 70:30 for tariff calculations, which is a standard practice in the industry. The 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, is another important factor in the tariff determination process. The post-tax return on equity remains unchanged at 15% for small hydro projects and 14% for all other eligible renewable energy technologies, providing a fair and consistent return on investment.
The proposed tariffs for different renewable energy projects are quite varied, reflecting the diverse nature of the technologies. For small hydro projects, the levellised tariff ranges from ₹6.69 per kWh for projects below 5 MW to ₹6.02 per kWh for projects between 5 MW and 25 MW. For projects located in other states, the tariffs are slightly higher, ranging from ₹7.70 per kWh to ₹7.49 per kWh. For biomass-based power projects, the tariffs vary according to technology, fuel type, and cooling system, generally ranging between ₹9.5 and ₹11.6 per kWh.
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. These tariffs provide a clear and transparent framework for developers and investors, allowing them to plan and execute their projects with confidence.
The Commission has also taken into account the feedback received during the consultation process and has made provisions for any subsidies, grants, or incentives received from the Central or State Government that have not been considered while determining tariffs. This ensures that the final tariff order is fair and equitable, taking into account all relevant factors.
In conclusion, the CERC's draft proposal for determining the levellised generic tariff for renewable energy projects is a significant step towards a more sustainable and resilient energy sector in India. The proposal provides a stable and predictable environment for investors and developers, ensuring that the costs associated with renewable energy projects remain consistent and manageable. The varied tariffs for different renewable energy projects reflect the diverse nature of the technologies, and the Commission's attention to detail and feedback ensures a fair and equitable final tariff order.
