MNRE Approves 500 MW Pilot CfD Scheme to Boost Renewable Market Integration
Ministry of New and Renewable Energy has approved a 500 MW pilot CfD scheme, to be implemented by Solar Energy Corporation of India, to enable market-linked renewable procurement with assured pricing, supporting 1,500 MWh daily supply during non-solar hours.
April 01, 2026. By Mrinmoy Dey
The pilot, to be implemented by the Solar Energy Corporation of India (SECI), will support the supply of 1,500 MWh (500 MW x 3 hours) of renewable energy daily during non-solar hours, effectively addressing intermittency challenges while enabling better integration of renewables into power markets.
At its core, the CfD mechanism allows developers to sell electricity on power exchanges while ensuring a fixed ‘strike price’. Any shortfall between the market-clearing price and the strike price will be compensated through a dedicated CfD pool, while excess gains will flow back into the pool – ensuring predictable revenue streams for developers without distorting market price discovery.
Settlements would be benchmarked to zonal Day-Ahead Market (DAM) prices and administered through a dedicated CfD Stabilisation Fund of INR 76 crore provided by the Government, SECI proposed.
The pilot projects will be developed under a Build-Own-Operate model, with a contract tenure of 12 years. “After 12 years, the RE Generator (REG) would be free to continue in the market without a CfD or enter into a PPA/bilateral contract to supply power to any entity, fulfilling regulatory requirements,” noted the guidelines.
Developers will be selected through a transparent reverse bidding process, with a cap of 125 MW per bidder to ensure broader participation.
In a notable design feature, the scheme introduces a profit-and-loss sharing mechanism between developers and the CfD pool in a 30:70 ratio, alongside provisions for Renewable Energy Certificate (REC) monetisation, the proceeds of which will also flow into the CfD pool.
The scheme also mandates structured market participation, requiring generators to bid sequentially across the Green Day Ahead Market (GDAM), Day Ahead Market (DAM), and Real Time Market (RTM), thereby enhancing liquidity and reducing curtailment risks.
With India’s renewable capacity already surpassing 190 GW as of December 2025, MNRE’s move signals a strategic evolution beyond traditional power purchase agreements (PPAs), toward more dynamic and market-linked frameworks. The pilot is expected to test the financial, operational, and regulatory viability of CfDs in India, laying the groundwork for large-scale adoption in the future.
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