HPERC Proposes Generic Solar PV Tariffs for FY 2026-27; Stakeholder Feedback Window Open

The Himachal Pradesh Electricity Regulatory Commission (HPERC) has initiated a suo-motu proceeding (Petition No. 14/2026) to determine the Generic Levellised Tariff for Solar PV Projects for the Financial Year 2026-27. In a significant regulatory departure, the Commission has evolved its own technology-specific parameters and benchmark costs, citing the absence of normative capital cost provisions for solar PV in the CERC Renewable Energy Tariff Regulations, 2024. The proposed tariffs are slated to apply to projects commissioned between April 1, 2026, and March 31, 2027.

Project Categorization and Capacity Tiers

The draft order maintains a strategic focus on promoting smaller capacities across the state’s diverse topography. Projects are classified into four distinct categories based on installed capacity at a single site:

• Category I: Up to 1 MW capacity.
• Category II: Above 1 MW and up to 3 MW capacity.
• Category III: Above 3 MW and up to 5 MW capacity.
• Category IV: Above 5 MW capacity. The Commission explicitly mandates that procurement for this category shall fall under competitive bidding routes or via the Solar Energy Corporation of India (SECI).

Technology Scope and Technical Parameters

While the primary focus remains on grid-connected Solar PV (utilizing poly-crystalline silicon, Mono PERC, or other MNRE-approved technologies), the regulatory scope encompasses all MNRE-approved technologies, including Solar Thermal, as part of the broader promotion of renewable generation.

Key operational norms include:

• Useful Life and Tariff Period: Defined as 25 years from the date of commercial operation.
• Capacity Utilization Factor (CUF): Set at a normative 21%.
• System Losses: Combined auxiliary consumption, transformer, and project line losses are capped at 1.45% of gross generation.

Benchmark Costs and the “GST Driver”

A critical analytical component of this proposal is how the Commission arrived at capital costs. HPERC utilized an average Solar PV Module price of $74,500/MW. Based on a six-month average exchange rate of Rs. 88.15/USD, the base module cost was determined to be Rs. 65.67 Lakhs/MW.

To account for the 25% to 40% import duties and other market sensitivities, the Commission applied a 30% escalation to the module base, resulting in a normative module price of Rs. 85.37 Lakhs/MW. Crucially, the Commission highlighted a major regulatory shift: the reduction of GST on solar modules from 12% to 5% (w.e.f. September 22, 2025). This reduction allowed the Commission to lower the annual escalation rate for “other components” to 3%, down from the 5% used in previous fiscal cycles.

Proposed Normative Capital Cost (Lakh Rs./MW)

The Commission has proposed higher capital costs for urban and industrial areas to incentivize “optimal utilization” of power near load centers.

Financial Principles

The financial modeling adheres to the RE Tariff Regulations, 2017 (4th Control Period), utilizing the following precision norms:

• Debt-Equity Ratio: 70:30.
• Return on Equity (RoE): Base rate of 14%. When grossed up, this becomes 16.805% for the MAT period (Years 1-20) and 19.396% for the Corporate Tax period (Years 21-25).
• Interest on Loan: 10.80% per annum (based on SBI 1-year MCLR plus 200 basis points).
• O&M Expenses: Rs. 10.96 Lakh/MW for FY 2026-27, with a 3.84% annual escalation.
• Discount Factor: 9.66%.

Proposed Generic Levellised Tariff Rates

The final proposed rates (rounded to the nearest paise) do not include capital subsidies or grants. Furthermore, a state-mandated royalty of 5 paise per unit originating from Notification No. MPP-F(10)-43/2023 dated September 21, 2023 is payable to the State Government over and above these rates and is eligible for pass-through.

Applicability and Alignment

This tariff regime does not apply to projects under net-metering (rooftop or ground-mounted), power procured via SECI, or procurement through competitive bidding under Section 63 of the Electricity Act, 2003. It is intended for projects where the Joint Petition for PPA approval is submitted between April 1, 2026, and March 31, 2027, provided they are commissioned by March 31, 2028.

Call to Action: Stakeholder Directive

The Commission is now open to public participation regarding these proposed norms and rates. Submissions should clearly reference Suo-Motu Petition No. 14/2026 to ensure formal consideration in the final tariff determination.