The Chhattisgarh State Electricity Regulatory Commission (CSERC) has proactively issued an order that establishes generic levelized generation tariffs for renewable energy projects for the financial year 2025-26. This new directive is applicable to projects that reach their Commercial Operation Date (COD) within the first year of the 2025 control period. The technologies included in this initiative encompass small hydro projects, non-fossil fuel-based co-generation plants, biogas power projects, and solar photovoltaic (PV) projects ranging from 0.5 MW to 2 MW.
Understanding Useful Life and Tariff Structure
To determine the tariff period, CSERC has outlined the “useful life” for each type of project. Small hydro projects are assigned a useful life of 40 years, whereas solar PV, biogas, and co-generation projects are designated a lifespan of 25 years. Most projects will operate under a single-part tariff model, with the exception of biogas and co generation plants, which will implement a two-part tariff structure that includes both fixed and variable charges to better reflect operational realities.
Financial Parameters Set by the Commission
The Commission has established essential financial parameters to assist in tariff calculations. A uniform debt-equity ratio of 70:30 has been applied across the board. For FY 2025-26, the loan interest rate has been set at 10.99%, calculated based on the State Bank of India’s Marginal Cost of Funds-based Lending Rate (MCLR) plus an additional 200 basis points. Depreciation is permitted up to 90% of the project’s capital cost, with an annual depreciation rate of 4.67% for the first 15 years. Additionally, the return on equity has been fixed at 15% for small hydro projects and 14% for other
renewable technologies, adjusted for the current Minimum Alternate Tax (MAT) of 17.472%.
Capital Costs and Operational Expenses
Capital costs vary among different technologies. For small hydro projects up to 5 MW, the normative capital cost is set at ₹890 lakh per MW, while projects ranging from 5 MW to 25 MW are pegged at ₹1,027 lakh per MW. Solar PV projects are estimated at ₹3.5 crore per MW, and biogas projects incur the highest costs at ₹1,354 lakh per MW. Annual operation and maintenance (O&M) expenses are defined and are expected to increase by 5.25% each year, ranging from ₹9.26 lakh per MW for solar PV to ₹76.04 lakh per MW for biogas projects. Performance norms, including Capacity Utilisation Factor (CUF) and Plant Load Factor (PLF), are established at 30% for small hydro, 21% for solar PV, and 90% for biogas.
Levelized Tariffs for the Financial Year 2025-26
The finalized levelized tariffs for the financial year 2025-26 are as follows: – Small Hydro Projects: ₹7.42/kWh to ₹8.07/kWh, depending on the size. – Solar PV Projects (0.5–2 MW): ₹3.39/kWh.
– Non-Fossil Fuel Co-Generation Plants: Fixed cost ₹4.50/kWh, variable cost ₹4.93/kWh.
– Biogas-Based Projects: Fixed charges ₹4.88/kWh, energy charges ₹6.00/kWh. Engaging Stakeholders for Feedback
CSERC has encouraged stakeholders to share their comments or suggestions regarding the proposed tariffs by January 20, 2026. A formal hearing is scheduled for January 22, 2026. This order is anticipated to bring clarity and financial stability to renewable energy developers in Chhattisgarh, bolstering the state’s ongoing initiatives to enhance its clean energy capacity and foster sustainable development.
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