Himachal Pradesh Electricity Regulatory Commission (HPERC) has notified a levelized tariff of ₹3.4 (~$0.037)/kWh for solar projects with a capacity of over 3 MW and up to 5 MW in urban and industrial areas for the financial year (FY) 2027

The Commission also set the following levelized tariffs for solar projects between 1 MW and 3 MW:

These tariffs have been issued under the Renewable Energy Sources and Terms and Conditions for Tariff Determination Regulations, 2017.

Stakeholders must share their comments or objections before February 10, 2026.

The Commission fixed the normative capital cost in the following ways to arrive at the levelized tariffs:

Projects in Areas Other than Urban and Industrial Areas

Capital cost for projects up to 1 MW will be ₹35.26 million (~$392,045)/MW

Capital cost for projects above 1 MW and up to 3 MW will be ₹34.42 million (~$382,706)/MW

Capital cost for projects above 3 MW and up to 5 MW will be ₹33.58 million (~$373,366)/MW

Projects in Urban and Industrial Areas

Capital cost for projects up to 1 MW will be ₹36.05 million (~$400,829)/MW

Capital cost for projects above 1 MW and up to 3 MW will be ₹35.19 million (~$391,267)/MW

Capital cost for projects above 3 MW and up to 5 MW will be ₹34.33 million (~$381,705)/MW

HPERC fixed the operation and maintenance (O&M) expenses at ₹1.1 million (~$12,230.6)/MW for FY 2027. The normative O&M charges will be escalated at 3.84% per annum over the tariff period.

The capacity utilization factor for these projects will be fixed at 21%, and gross generation will be reduced by 1.45% to account for auxiliary consumption, transformation losses, and project line losses up to the interconnection point on a normative basis.

The tariff structure comprises return on equity, interest on loan capital, depreciation, and interest on working capital.

The Commission has used the 25-year useful life of the projects for calculating the tariffs.

The normative debt-equity ratio will be considered 70:30.

Any subsidy, incentive, or grant received for the projects must be adjusted on a million-rupee basis for each MW of project capacity.

Return on Equity

The base value for the equity on which the return on equity is calculated will equal the equity component in accordance with the provisions of Regulation 23-C.

The normative return on equity will be 14%.

Interest on Loan

HPERC fixed the interest rate on loans at 10.8% per annum by adding 200 basis points above the average of the marginal cost of funds-based lending rate (MCLR) for one year, based on the State Bank of India’s (SBI) MCLR prevailing during the last six months. The loan tenure was considered 15 years for tariff determination.

Depreciation

The rate of depreciation has been fixed as 4.67% for the first 15 years and 1.99% for the remaining project life.

Interest on Working Capital

The Commission fixed the interest on working capital at 12.3% per annum by adding 350 basis points above the average of MCLR for one year, based on SBI’s prevailing MCLR during the preceding six months.

Discount Factor

HPERC considered the discount factor equivalent to the post-tax weighted average cost of capital in the levelized tariff computation. The discount factor has been calculated based on the normative 70:30 debt-equity ratio and the weighted average of the post-tax rates for the debt and equity components.

For FY 2026, HPERC approved a levelized tariff of ₹3.45 (~$0.04)/kWh for solar projects up to 1 MW and ₹3.38 (~$0.039)/kWh for projects between 1 MW and 3 MW. The Commission fixed the levelized tariff for projects between 3 MW and 5 MW at ₹3.32 (~$0.39)/kWh for areas other than urban and industrial zones.

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