In September 2025, our Central Electricity Regulatory Commission (CERC) released a draft proposal. This proposal would implement onerous new regulations and compliance requirements on wind and solar energy generators operating in India. This effort is part of the Deviation Settlement Mechanism. This initiative seeks to increase the accuracy of forecasting and scheduling processes for both renewable energy producers and grid operators. Needless to say, the proposed rules have alarmed industry stakeholders. They are concerned about the potential negative impacts of these rules on the viability of projects and future investments in the country’s clean energy sector.
The 2015 regulations require renewable electricity producers to exactly balance their promised green electricity inputs to the grid. Beginning in April 2026, we’ll recalculate the formula for determining deviations. This will be an annual step down in tolerance margins that will go all the way to 2031. By that year, home-based renewable generators will have to follow grid discipline just like any other traditional power plant.
Concerns Over Financial Viability
As you have likely seen, industry representatives have voiced concern that the rules as written would threaten the financial viability of numerous projects. The Wind Independent Power Producers Association called for a moratorium. As an example, their own calculations showed that some wind projects would lose up to 48% of their revenue under these changes. These penalties would impose harmful monetary pressure, especially on long established projects built to earlier standards.
“These penalties could cause huge losses, especially for older projects that were built under different rules.” – Wind Independent Power Producers Association [“Reuters”]
Moreover, the association has already filed a legal challenge against last year’s regulations regarding power supply deviations and planning in April. This legal move underscores the growing discord in the industry. Stakeholders have been scrambling to protect their interests from proposed regulatory changes that would be damaging …
Implications for Investment
India is aiming to have 500 gigawatts (GW) of non-fossil-based power capacity by 2030. These stricter rules are intended to back up this ambitious goal. Industry insiders say the stricter regulations could frighten away investors. This interests the domestic players as well as the global players looking to enter or expand in India’s clean energy market. The impact on the investment landscape reduced profits for firms may chill the appetite to invest. This undermines India’s larger aspirations for an energy transition.
As India’s renewable energy sources make up more and more of its overall energy mix, the need for a reliable grid will only become more important. The CERC’s proposal is a step to improve operational efficiency in the highly fragmented sector which is much needed. It awkwardly highlights the need to find the right balance between regulatory oversight and maintaining a favorable investment climate.
Aiming for Grid Reliability
The initiative to revise these regulations reflects India’s commitment to scaling up its renewable energy capacity while promoting greater accountability among producers. The government has been motivating renewable generators to improve their forecasting and scheduling. It’s a smart step to address the challenges associated with adding more intermittently produced electricity to the grid, which we’ve previously written about.
Despite the positive developments, stakeholders continue to express concern about the potential backlash on these changes. The industry has a unique opportunity. We need to keep pace with regulatory requirements without losing our financial sustainability in the process. India is following lofty renewable energy targets. If we want continued growth in this emerging industry, keeping the confidence of investors will be very important.