CERC's tighter green power regulations may hit clean energy investments

India's planned rules requiring renewable producers to strictly adhere to their promised green energy supply to the grid would squeeze company earnings and slow investment in the sector, a review of industry letters showed on Wednesday.

The Central Electricity Regulatory Commission (CERC), in its draft published in September 2025, proposed tighter regulations for wind and solar power producers under the Deviation Settlement Mechanism.

The new framework aims to gradually narrow the permissible gap between the amount of electricity producers commit to supply and what they actually generate.

Starting April 2026, the formula used to calculate these deviations will be revised, with the tolerance margin shrinking each year until 2031 - when renewable generators will be treated on par with conventional power plants.

The goal is to push renewable generators to improve their forecasting and scheduling accuracy to ensure grid reliability and discipline as renewables account for a larger share of India's energy mix.

However, industry groups warn that the planned rules could hurt wind energy projects, as their generation depends on "unpredictable" weather unlike solar, coal and gas-fired plants, which can modulate output.

"These penalties could cause huge losses, especially for older projects that were built under different rules," said the Wind Independent Power Producers Association in a letter to the CERC, reviewed by Reuters.

The group estimated that some wind projects could lose up to 48 per cent of their revenue.

In April, the body challenged last year's regulations on deviation of power supply and planning in court, arguing that the proposed changes could result in substantial financial burden for developers.

The National Solar Energy Federation of India, in a letter to the CERC, also cautioned that the rules could potentially undermine project viability and deter future investments in India's clean energy.

India is seeking to sharply expand its renewable base, aiming to double its non-fossil based power capacity to 500 gigawatts as part of its energy transition goals.