The Himachal Pradesh Electricity Regulatory Commission (HPERC) has determined the generic levelized tariffs for solar projects up to 5 MW for the financial year (FY) 2026-27. The tariffs range from ₹3.34 (~$0.035)/kWh to ₹3.52 (~$0.038)/kWh, depending on project capacity and location.

For projects outside urban and industrial zones, tariffs have been set at ₹3.47 (~$0.0373)/kWh for up to 1 MW, ₹3.40 (~$0.0366)/kWh for 1-3 MW, and ₹3.34 (~$0.0359)/kWh for 3-5 MW.

For projects in urban and industrial areas, the tariffs are ₹3.52 (~$0.0379)/kWh for up to 1 MW, ₹3.46 (~$0.0372)/kWh for 1-3 MW, and ₹3.40 (~$0.0366)/kWh for 3-5 MW. Higher tariffs apply for projects in urban and industrial areas.

The Commission clarified that the tariff order excludes projects procured through competitive bidding and those under net metering schemes.

The order will apply to projects for which power purchase agreements are signed between April 1, 2026, and March 31, 2027, with commissioning permitted up to March 31, 2028.

A royalty of ₹0.05 (~$0.0005)/kWh will be levied on projects above 1 MW and passed through in power purchase costs.

Background

The Commission issued a draft proposal in January 2026, inviting comments from stakeholders.

During the consultation process, stakeholders raised concerns over key assumptions used in tariff computation.

Developers pointed to rising solar module prices driven by global supply chain factors and higher costs associated with developing projects in Himachal Pradesh’s hilly terrain, including transportation, civil works, and evacuation infrastructure.

They argued that the proposed normative capital cost did not reflect actual market conditions.

Concerns were also raised regarding the capacity utilization factor (CUF), with stakeholders stating that the proposed 21% CUF was difficult to achieve in the state due to terrain-related challenges, weather variations, and grid constraints.

Similarly, developers sought higher operation and maintenance (O&M) costs, citing the additional burden of maintaining projects in difficult geographical conditions.

Suggestions were also made to introduce more project categorization and to consider tariff frameworks for solar projects integrated with battery storage systems.

Commission’s Analysis

The Commission, while determining the tariffs, aimed at maintaining both project viability and consumer interest.

It revised the normative capital cost to ₹33.58 million (~$360,166)/MW, with higher allowances for smaller-capacity projects and those in urban or industrial areas.

However, the Commission rejected requests to lower the CUF, retaining it at 21% to align with regulatory benchmarks, and cautioned that reducing the CUF could incentivize inefficient project design and operation.

The Commission also retained O&M expenses at ₹1.09 million (~$11,691)/MW, with a 3.84% annual escalation, finding no justification for deviating from existing norms.

HPERC retained the normative debt-to-equity ratio at 70:30 in accordance with the Renewable Energy Tariff Regulations, 2017.

Regarding tariff levels, the Commission noted that national solar tariffs set through competitive bidding for large-scale projects are not directly comparable to those for smaller distributed projects in hilly regions. It emphasized that tariffs must remain competitive while ensuring financial viability to sustain solar capacity addition in the state.

Recently, HPERC reduced tariffs across all consumer categories for FY 2027.

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