Consultative Paper on Draft BERC (Terms and Conditions for Tariff determination from Renewable Energy sources) Regulations, 2025 – EQ
Summary
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## đź“Ś Context & Purpose
* Issued by **Central Electricity Regulatory Commission (CERC)**.
* Applicable for the **control period 01.07.2025 – 31.03.2028**.
* Covers tariff determination methodology for **renewable energy projects** under Section 61(h) of the Electricity Act, 2003.
* Objective: promote RE investments while ensuring consumer interests.
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## ⚡ Applicability
* Grid-connected **Solar PV, Solar Thermal, Wind (Onshore & Offshore), Small Hydro (≤25 MW), Biomass (Rankine Cycle, Gasifiers, Bagasse Cogeneration), MSW/RDF, and Hybrid Projects**.
* Excludes projects discovered under **competitive bidding** (only generic tariff projects covered).
* Tariff determination: **Generic Tariff** (suomotu by CERC) and **Project-specific Tariff** (on petition).
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## đź’° Tariff Principles
1. **Tariff Period:** 25 years (except SHP – 35 years).
2. **Tariff Components:**
* Return on Equity (RoE)
* Interest on Loan (IOL)
* Depreciation
* O\&M Expenses
* Interest on Working Capital
* Auxiliary Consumption (where applicable)
3. **Discount Rate:** 10% for NPV calculations.
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## đź“Š Financial Norms
* **Debt-Equity Ratio:** 70:30.
* **RoE:** Pre-tax 16% (grossed up with MAT/Tax rate).
* **Depreciation:** 4.67% p.a. for first 15 years, balance over remaining useful life.
* **Loan Tenure:** 15 years, repayment through equal annual installments.
* **Working Capital:** Normative formula defined for each RE technology.
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## 🔧 Technology-specific Norms
### 1. **Solar PV**
* CUF: 19% (normative).
* Capital Cost: â‚ą3.8 crore/MW.
* O\&M: â‚ą7 lakh/MW (with 3.84% escalation).
* Degradation: 0.75% p.a.
### 2. **Wind (Onshore)**
* CUF linked to wind zones (Zone I–V).
* Capital Cost: â‚ą6.2 crore/MW.
* O\&M: â‚ą10 lakh/MW.
### 3. **Solar Thermal**
* CUF: 23%.
* Capital Cost: â‚ą12 crore/MW.
* O\&M: â‚ą20 lakh/MW.
### 4. **Small Hydro (≤25 MW)**
* Capital Cost: Zone-wise (₹8–10 crore/MW).
* CUF: 40%.
* O\&M: 4% of capital cost.
### 5. **Biomass (Rankine Cycle, Gasifiers, Bagasse)**
* Fuel cost indexed annually.
* CUF: 80%.
* Capital Cost: â‚ą6.5 crore/MW.
### 6. **MSW / RDF**
* CUF: 65%.
* Capital Cost: â‚ą12 crore/MW.
* O\&M: 7% of capital cost.
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## 🏛️ Regulatory Process
* Draft issued for **public consultation**.
* Stakeholders invited to submit comments/suggestions before final notification.
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## âś… Significance
* Provides a **benchmark tariff framework** for RE projects outside competitive bidding.
* Introduces **updated capital cost and CUF norms** reflecting current market conditions.
* Supports hybrid & new technologies while maintaining investor confidence.
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