CERC Extends Validity of Existing Renewable Energy Tariffs Until June 30, 2020

The generic tariff issued by the CERC will continue to remain effective until June 30, 2020


The Central Electricity Regulatory Commission (CERC) has extended the applicability of the Renewable Energy Tariff Regulations, 2017, 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.

The CERC had released the draft tariff regulations for 2017 to 2020. The public hearing on the draft was held on March 15, 2017, and the draft came into effect on April 1, 2017.

As per the regulations, the control or review period under these regulations was for three years, of which the first year was the financial year 2017-18. The CERC had recommended a depreciation rate of 5.28% per year for the first 13 years with the remaining depreciation to be spread out over the remaining useful life of the projects (considering the salvage value of the project as 10% of the project cost). The Commission had also proposed a return on equity of 14% post-tax.

According to the regulations, the tariff period for renewable energy power projects will be the same as their useful life, and the tariff period under these regulations will be considered from the date of commercial operation of the renewable energy generating stations.

All renewable energy power projects except for biomass power projects with an installed capacity of at least 10 MW, and non-fossil fuel-based cogeneration projects will be treated as ‘Must Run’ power projects and will not be subjected to ‘merit order despatch’ principles.

Scheduling of wind and solar energy will be governed as per the CERC Regulations, 2015, and the CERC (Deviation Settlement Mechanism and related matters) Regulations, 2015 as amended from time to time.

As per the regulations, the capacity utilization factor (CUF) for the small hydro projects located in Himachal Pradesh, Uttarakhand, West Bengal, and the North-Eastern states will be 45%, and for other States, it will be 30%.

In March 2019, the CERC had set generic tariffs for the purchase of electricity from a host of renewable energy generation sources during the financial year 2019-20. The levelized generic tariff was set for small hydro projects, biomass with Rankine cycle projects, non-fossil fuel-based cogeneration projects, biomass gasifiers, and biogas-based projects. In its order, the CERC had considered the useful life of small hydro projects to be 35 years. In contrast, the useful life for biomass with the Rankine cycle, non-fossil fuel-based cogeneration, biomass gasifiers, and biogas-based projects will be 20 years.

In November last year, the 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 (ISTS) customers, inter-state transmission licensees (ISTL), national load despatch center (NLDC), regional load despatch centers (RLDCs), state load despatch centers (SLDCs), and regional power committees (RPCs).