CERC Notifies Phased ‘X’ Factor Reduction for Wind and Solar, Tightens Deviation Bands from April 2026
CERC has notified a phased trajectory for the ‘X’ factor under DSM Regulations, tightening deviation norms for wind and solar generators from April 1, 2026. While the value of ‘X’ reduces from 100 percent in FY27 to zero percent from 2031, deviation tolerance has been reduced to ±5 percent for solar/hybrid and ±10 percent for wind.
April 01, 2026. By Mrinmoy Dey
The order follows stakeholder consultations and analysis of forecasting performance, and marks a transition in the deviation calculation methodology from one based on available capacity to a combination of available capacity and scheduled generation.
As per the order, the value of ‘X’ will remain at 100 percent for FY 2026–27, ensuring that the existing deviation computation framework continues during the first year. Thereafter, a phased reduction has been specified. For solar and wind-solar hybrid projects, ‘X’ will reduce from 100 percent in 2026–27 to 90 percent in 2027–28, 75 percent in 2028–29, 55 percent in 2029–30, 30 percent in 2030–31, and 0 percent from 2031 onwards. For wind projects, the trajectory will be 100 percent, 95 percent, 85 percent, 65 percent, 35 percent, and 0 percent over the same period.
The Commission has also noted that, in line with the DSM Regulations, 2024, the revenue-neutral deviation bands will be tightened from April 1, 2026. For solar and hybrid projects, the tolerance band will be reduced from ±10 percent to ±5 percent, while for wind projects, it will be reduced from ±15 percent to ±10 percent.
CERC stated that the DSM framework for renewable energy has been in place since 2015, with forecasting and scheduling obligations already applicable to wind and solar generators. The Commission referred to the role of Renewable Energy Management Centres (REMCs), which provide forecasting support using multiple data sources, including weather inputs and real-time system data, and enable scheduling at various time intervals.
During the consultation process, the Commission received responses from 46 stakeholders, including renewable energy developers, industry associations, DISCOMs, and system operators. Issues raised included adequacy of forecasting data, financial impact of deviation penalties, implementation timelines, aggregation mechanisms, and the proposed trajectory of the ‘X’ factor.
The Commission observed that stakeholder views were mixed, with some seeking deferment or a slower transition, while others supported faster alignment with schedule-based deviation calculation. It also noted that aggregation at pooling stations and the use of Qualified Coordinating Agencies (QCAs) are already provided for under existing regulations and can help reduce deviation impacts.
The order further highlighted operational data indicating increasing challenges in grid management with higher renewable penetration, including instances of high system frequency and significant deviations between scheduled and actual generation.
CERC has clarified that the implementation of this order will be subject to the outcome of ongoing writ petitions before the Delhi High Court challenging provisions of the DSM Regulations, 2024. The Court has directed that no coercive action be taken against the petitioners until further hearings.
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