MNRE Opposes Uniform DSM Norms, Seeks Separate Rules for Wind and Solar Projects

The Ministry of New and Renewable Energy (MNRE) has asked the Central Electricity Regulatory Commission (CERC) to introduce separate Deviation Settlement Mechanism (DSM) norms for wind and solar power projects, saying a uniform framework for renewable and conventional power generators could increase financial risks and affect the sector's growth.

In its comments on the draft Deviation Settlement Mechanism and Related Matters (Third Amendment) Regulations, 2026, the Ministry said that renewable energy generation is inherently weather-dependent and should not be subjected to the same deviation settlement framework as thermal and other conventional power plants.

The draft regulations propose applying similar DSM charges across wind, solar and other electricity generators. The MNRE said that such an approach could weaken the financial viability and bankability of renewable energy projects by exposing developers to greater uncertainty, which may eventually lead to higher tariffs.

To address these concerns, the ministry has proposed a graded, technology-specific DSM framework that considers the maturity of forecasting and scheduling systems, Renewable Energy Management Centres (REMCs), ancillary service markets, energy storage capacity and overall grid readiness.

The Ministry has also recommended exemptions or an extended transition period for smaller renewable energy generators to facilitate compliance with the revised framework. It further suggested incorporating weather-related factors into DSM calculations and allowing developers to offset deviations through self-procurement or third-party mechanisms, including services provided by Grid India.

The ministry further said that a differentiated DSM framework would better reflect the operational characteristics of renewable energy projects while supporting their financial sustainability and India's clean energy transition.