CERC's draft generic renewable energy tariffs for FY 2026-27: A step forward or a missed opportunity?
The Central Electricity Regulatory Commission (CERC) has released a draft proposal for determining the levellised generic tariff for renewable energy projects, aiming to provide a stable and predictable framework for developers. While this is a positive step towards fostering investment in clean energy, there are several aspects of the proposal that warrant scrutiny and potential revision.
One thing that immediately stands out is the continued reliance on project-specific tariffs for solar, wind, hybrid renewable energy, and energy storage projects. While the draft acknowledges the need for flexibility in these technologies, it fails to address the unique challenges and opportunities they present. In my opinion, this is a missed opportunity to create a more comprehensive and forward-thinking framework that can support the rapid growth of these sectors.
What makes this particularly fascinating is the decision to retain the existing capital cost norms for all eligible renewable energy technologies. While this may provide a sense of continuity, it also risks perpetuating outdated assumptions about the cost of capital for these projects. In my view, this is a missed chance to encourage innovation and drive down costs by embracing new financing models and technologies.
From my perspective, the draft proposal also fails to adequately address the role of subsidies, grants, and incentives in the renewable energy sector. While it acknowledges that these will be adjusted in future tariff payments, it does not provide a clear framework for how this will be done. This raises a deeper question about the role of government support in the transition to clean energy and the need for a more integrated approach to policy-making.
A detail that I find especially interesting is the proposed tariffs for small hydro projects. While the levellised tariff of ₹6.69 per kWh for projects below 5 MW and ₹6.02 per kWh for projects between 5 MW and 25 MW is competitive, it is worth noting that these projects are often located in remote and challenging environments. This raises the question of how the draft proposal will support the development of these projects and ensure that they are economically viable.
What this really suggests is that the draft proposal, while a step forward, is not without its flaws. It fails to adequately address the unique challenges and opportunities presented by different renewable energy technologies and risks perpetuating outdated assumptions about the cost of capital. In my opinion, a more comprehensive and forward-thinking approach is needed to support the transition to clean energy and ensure that the sector can thrive in the years to come.
