New grid penalty rules could dent renewable earnings, trigger tariff concerns

The article reports a CFO of a major renewable energy company estimating that about 52 GW of capacity could face revenue losses of around ₹1,000 crore annually due to the new DSM. MP Ramesh, former executive director of the National Wind Energy Institute, warns that net revenues for wind projects could fall by up to 48% and solar by 11.1% over five years if weather forecasts do not improve. An anonymous MNRE official notes there may be no immediate tariff impact and that the ministry will work with stakeholders to manage deviations; the official also observes wind generation faces greater uncertainty. The piece also references inputs from industry bodies on the impact of DSM penalties as a percentage of revenue for various 'X' values and mentions IMD’s forecast accuracy challenges and related Vision 2047 goals.

The Karnataka High Court stayed the DSM plan until June 10, 2026, after the National Solar Energy Federation of India challenged the CERC order.

As of March 31, 2026, India's renewable energy capacity stood at 274.68 GW, with an addition of 51 GW in FY26 alone, providing the broader backdrop for DSM penalties.

The Central Electricity Regulatory Commission (CERC) unveils a new deviation settlement mechanism (DSM) formula aimed at progressively tightening penalties over the next five years. It sets tolerance bands at 10% for wind and 5% for solar, with the article noting these bands were previously 15% for wind and 10% for solar.