CERC Proposes Phased Schedule-Based Deviation Mechanism for Wind and Solar from April 2026

The Central Electricity Regulatory Commission (CERC) has unveiled a proposal to revise the computation of deviations for Wind and Solar (WS) sellers under the Deviation Settlement Mechanism (DSM), aiming to enhance grid stability as India accelerates its renewable energy capacity.

The proposal outlines a phased transition from the current deviation formula based on available capacity to one anchored on scheduled generation, effective from April 1, 2026.

The DSM Regulations, 2024, notified on April 30, 2024, currently set revenue-neutral tolerance bands at +/-10 percent for solar and hybrid projects and +/-15 percent for wind projects. Under the proposed revision, these bands will narrow to +/-5 percent for solar/hybrid and +/-10 percent for wind projects. The Commission emphasised that the transition aims to align deviation criteria for renewable energy generators with conventional sources while recognising the intermittency of wind and solar generation.

To determine the critical parameter ‘X’, which defines the weighting between available capacity and scheduled generation in deviation calculations, CERC engaged Grid-India to conduct a 41-week simulation study across 16 renewable energy plants in Northern, Western, and Southern regions. The analysis revealed that under the tightened tolerance bands, the proportion of time WS sellers remain within limits drops significantly: 45–58 percent for solar, 32–73 percent for wind, and 38–47 percent for hybrid projects, highlighting the need for improved forecasting and operational measures.

The study also analysed revenue impacts across varying X values. Solar plants faced revenue losses ranging from 3.5 percent to 11.1 percent, hybrid projects from 2.4 percent to 11.8 percent, and wind projects up to 48.2 percent in extreme cases. Aggregation of multiple WS sellers at pooling stations via a Qualified Coordinating Agency (QCA) was shown to significantly mitigate DSM charges, with reductions of up to 67 percent in some regions, underscoring aggregation as an effective strategy for grid-supportive integration of renewable energy.

CERC’s proposal lays out a phased reduction in X for existing projects: 100 percent from April 2026–March 2027, gradually decreasing to 0 percent from April 2031 onward. From that date, all WS projects, existing and new, will be treated at par with conventional generators. The Commission has invited stakeholder comments on the proposed trajectory by October 5, 2025.

The Commission stressed that as renewable energy reaches nearly 50 percent of total installed capacity, stricter deviation norms are essential to safeguard grid security. No payments will be made for over-injection by WS sellers when system frequency exceeds 50.05 Hz, reflecting CERC’s proactive measures to manage the operational challenges posed by large-scale renewable integration.

This move marks a significant step towards a more disciplined, forecast-driven, and grid-supportive renewable energy framework in India, in line with the country’s ambitious 500 GW renewable energy target by 2030.