The Central Electricity Regulatory Commission (CERC) has issued revised regulations on tariff determination of renewable energy sources for the period from April 1, 2024 to March 31, 2027. For renewable energy projects other than small hydro projects, the return on equity shall be 14%, whereas it shall be 14.5% for small hydro projects, as per the regulations, which will apply for all grid-connected generating stations relying on renewable energy.
The draft regulations does not apply to the bid out projects by the Solar Energy Corporation of India but lays guidelines for State Electricity Regulatory Commissions for state sector projects or projects that have not yet transitioned into the competitive bidding mode. However, over the past few years, many public sector undertakings have also shifted to the competitive bidding system.
The Commission will determine a ‘generic tariff’ annually for renewable energy projects including small hydro, biomass power project, non-fossil fuel based co-generation project, biomass gasifier based power project, biogas based power project, municipal solid waste based power projects, and refuse derived fuel based power projects.
Furthermore, for projects involving solar PV, floating solar or solar thermal power, wind power, renewable hybrid energy, or any other project based on new renewable energy sources as approved by the government, CERC will determine a ‘project specific tariff’. The tariffs shall take into account return on equity, interest on loan, depreciation, interest on working capital, and operation and maintenance expenses.
In case a project generates energy in excess of the plant load factor, the RE project may sell the excess energy to any entity, provided the first choice is given to the concerned beneficiary.
The draft regulations does not apply to the bid out projects by the Solar Energy Corporation of India but lays guidelines for State Electricity Regulatory Commissions for state sector projects or projects that have not yet transitioned into the competitive bidding mode. However, over the past few years, many public sector undertakings have also shifted to the competitive bidding system. “The regulations are more of a regulatory exercise for the state commissions and are unlikely to impact power companies as the majority has now shifted to the competitive bidding mode,” said Vikram V, vice-president & sector head, corporate ratings, Icra.
