The Meghalaya State Electricity Regulatory Commission (MSERC) has issued draft rules laying down the terms and conditions for tariff determination for power generated from renewable energy sources. The rules will remain in force until March 31, 2028.

Stakeholders must send their objections/comments within 15 days.

The draft Meghalaya State Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Generation from Renewable Energy Sources) Regulations 2025 applies to all grid-connected renewable energy projects whose power procurement tariffs must be determined by the Commission. It covers wind, solar, floating solar, solar thermal, renewable hybrid projects, and renewable energy with storage projects.

Wind projects must use new wind turbine generators at sites approved by the nodal agency or the government.

Floating solar installed with any existing renewable energy project other than ground-mounted solar will be treated as a hybrid renewable energy project.

Hybrid projects must have at least 33% of installed capacity from one of the constituent renewable energy sources at a common interconnection and metering point.

Renewable energy with storage projects must use a part or all of the project’s renewable generation to charge a storage system, and both must be connected at the same interconnection point.

Project-specific tariffs will be determined on a case-by-case basis for solar, floating solar, solar thermal, onshore and offshore wind, renewable energy hybrid, and renewable energy with storage.

Project-specific tariffs may also apply to any new renewable energy technologies approved by the central government. All financial and operational norms, other than capital cost, will serve as ceiling norms.

If the energy generated by a renewable energy project exceeds the normative capacity utilization factor (CUF) or plant load factor (PLF), it may be sold in the power market through bilateral or collective transactions. The buyer of the excess energy must pay the tariff applicable for the year.

Tariff Structure

Tariffs for renewable energy will comprise return on equity, interest on loan, depreciation, interest on working capital, and operation and maintenance (O&M) expenses.

The generic tariffs will be determined on a levelized basis, taking into account the project’s year of commissioning.

The levelized tariff will be computed by accounting for the discount factor equal to the post-tax weighted average cost of capital.

Capital Cost

The norms of capital cost include land costs, pre-development expenses, the cost of plant and machinery, civil works, erection and commissioning, financing costs, interest during construction, and development of evacuation up to the interconnection point.

Debt Equity Ratio

The debt–equity ratio for the generic and project-specific tariff will be 70:30.

Interest and Finance Charges

The generic and project-specific tariffs will be calculated assuming a loan tenure of 15 years.

The interest on loan will be computed at the normative rate of 200 basis points above the average of the State Bank of India’s one-year marginal cost of funds-based lending rate during the last six months.

The loan repayment will begin in the first year of commercial operation and will be equal to the annual depreciation allowed.

Depreciation

Depreciation will be calculated on the following basis:

The value base for depreciation will be the project’s capital cost.

Depreciation will be allowed up to 90% of the project’s capital cost, with a salvage value of 10%. No depreciation will be allowed on the grant or capital subsidy received for the project.

A depreciation rate of 4.67% per annum will be applied for the first 15 years, and the remaining depreciation will be spread evenly over the remaining useful life.

Return on Equity

The normative return on equity is set at 14% for all renewable energy technologies, except small hydro projects.

The return on equity will be grossed up by the applicable minimum alternate tax rate for the first 20 years and by the corporate tax rate thereafter.

Interest on Working Capital

Working capital will include one month’s O&M and receivables equivalent to 45 days of tariff for the sale of electricity, calculated on the normative CUF or PLF. The working capital will also comprise 15% of O&M expenses.

In the case of renewable hybrid projects, the working capital will be the sum of the working capital requirements for renewable energy sources, proportionate to their rated capacity in the project.

Interest on working capital will be the interest rate equal to the normative interest rate of 325 basis points above the average one-year State Bank of India’s Marginal Cost of Funds based Lending Rate for a one-year tenor in the last six months.

CUF and PLF

The CUF and PLF will be calculated by assuming 8,766 hours per year,

O&M Expenses

The O&M expenses will be determined based on normative O&M expenses in the first year of the control period.

The normative O&M allowed in the first year of the control period will be escalated at 5.25% annually.

Rebate on Bills

A rebate of up to 1.5% on the bill amount can be availed for timely payment.

In case of payment delays exceeding 45 days, a late payment surcharge will apply.

The Commission will factor in grants, subsidies, and incentives, including accelerated depreciation, when determining tariffs.

Developers will also be allowed to recover statutory levies such as electricity duty on auxiliary consumption, within the normative limit.

CUF for Wind Projects

For wind power projects, the CUF will range from 22% for projects with an annual mean wind power density up to 220 watts/m² to 35% for projects with an annual mean wind power density above 440 watts/m².

The annual mean wind power density will be calculated at a height of 100 m.

CUF for Solar Projects

Solar projects must maintain a minimum CUF of 21%, and the CUF for floating solar projects will be 19%.

The Commission will approve auxiliary consumption for project-specific tariffs if the maximum auxiliary consumption for solar and floating solar projects is up to 0.75%

CUF for Hybrid Projects

Renewable hybrid projects must achieve a minimum CUF of 30% at the interconnection point. They will be offered a composite levelized tariff for the combined useful life of the renewable energy projects.

Storage Efficiency

For renewable energy with storage projects, the Commission will approve the storage efficiency only on a project-specific basis, with a minimum of 85% for solid-state battery systems.

The tariff for renewable energy with storage projects will be a composite tariff or a differential tariff based on the time of day, determined for energy supplied from the project and the storage facility.

The tariff will be determined for the supply of power on a round-the-clock basis or for time periods agreed by the project developer or the project beneficiary.

In August 2025, MSERC notified the “Intra-State Deviation Settlement Mechanism \and Related Matters Regulations, 2025” applicable across the entire state.

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