Markets & Policy

RERC Proposes Generic Biomass Power Tariff of ₹8.57/kWh for FY 2026–27

September 2, 2026 By Gaurav Nathani 3 min read
0:00 / 03:55

The Rajasthan Electricity Regulatory Commission (RERC) has issued draft regulations proposing a generic levellised tariff of up to ₹8.57/kWh for biomass power plants commissioned during the financial year (FY) 2026–27. Conducted under Petition No. 2436/2026, the proceedings govern the terms for the sale of electricity to Distribution Licensees. The Commission has established a deadline of September 11, 2026, for stakeholders to submit comments, objections, or suggestions regarding the proposed framework.

Proposed Tariff Structure and Breakdown

The proposed generic levellised tariff of ₹8.57/kWh specifically applies to biomass power plants utilizing Rankine cycle technology. While the broader regulatory framework references various renewable technologies, the RERC petition focuses on biomass-based generation. The following table identifies the technology scope for the proposed generic tariffs and provides context for other renewable categories under the wider regulatory framework:

Technology CategoryProposed Generic Tariff / Context
Biomass Power (Rankine Cycle)₹8.57/kWh (Proposed RERC Ceiling)
Biogas-based Projects₹11.17/kWh (Regulatory context)
Municipal Solid Waste (MSW)₹10.69/kWh (Regulatory context)
Small Hydro Projects₹5.00/kWh – ₹7.70/kWh (Regulatory context)

The draft states that the total tariff is comprised of two distinct elements:

  • Levellised Fixed Costs: Includes components such as return on equity, depreciation, interest on loans, and operation and maintenance (O&M) expenses.
  • Variable Cost Components: Applicable to technologies involving fuel costs, calculated based on specific fuel types such as rice straw or juliflora fuel.

Technical Norms and Financial Assumptions

The Commission’s calculations are based on a normative framework established for the useful life of the projects. These assumptions incorporate prevailing market conditions and specific financial spreads.

Financial Parameters

The following parameters underpin the determination of the proposed levellised costs:

ParameterValue/Norm
Debt-Equity Ratio70:30
Loan Tenor15 years
Return on Equity (RoE)14% (Post-tax)
Interest on LoanSBI MCLR* plus a spread of 200 basis points (10.71%)
Interest on Working CapitalSBI MCLR* plus a spread of 325 basis points (11.96%)

*Note: The SBI MCLR is defined as the average one-year State Bank of India Marginal Cost of Funds Based Lending Rate for the preceding six months.

Technical Parameters

The RERC specifies the following technical norms for biomass projects:

  • Useful Life: 25 years for biomass power projects.
  • O&M Expenses: Subject to an annual escalation rate of 5.25%.
  • Fuel Price Escalation: Variable cost components for biomass fuel are updated annually using a normative escalation rate of 3.45%.
  • Depreciation: Calculated at a rate of 4.67% per annum for the first 15 years, with the remaining value spread over the balance of the useful life.

Stakeholder Consultation and Submission Process

The Commission has directed stakeholders to the official RERC Jaipur website for the full text of the draft and screen reader access. The submission procedure for comments associated with Petition No. 2436/2026 is as follows:

  1. Review the draft regulations and associated financial/technical parameters.
  2. Prepare formal written comments or objections.
  3. Submit feedback via the provided email address or physical mail prior to the deadline.

Contact Information and Deadlines:

  • Deadline for Submission: September 11, 2026
  • Phone Contact: 0141-2741181 or 0141-2741016
  • Official Website: rerc.rajasthan.gov.in

Official Regulatory & Corporate Sources

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