CERC proposes phased shift in deviation settlement for wind and solar generators
Author: PPD Team Date: September 11, 2025
The Central Electricity Regulatory Commission (CERC) has issued a draft order proposing changes to the way deviations for wind and solar generators are calculated under the Deviation Settlement Mechanism (DSM). The new approach will come into effect from April 1, 2026.
The DSM Regulations, 2024, notified last year, already provide for a reduction in tolerance bands. For solar and hybrid projects, the permissible deviation will move from ±10 percent to ±5 percent, and for wind projects, from ±15 percent to ±10 percent. CERC is now consulting stakeholders on how the deviation should be computed, specifically on the value of “X” to be applied in the revised formula, which combines scheduled generation with available capacity.
A study by Grid-India covering 16 renewable projects showed that when the tighter bands were applied, compliance levels dropped significantly. For solar projects, the share of time within limits fell from 74 to 84 percent under the current band to 45 to 58 percent under the proposed band. For wind projects, compliance fell from 73 to 93 percent to 32 to 73 percent.
To ease the transition, CERC has proposed a phased reduction of the “X” value. It will remain at 100 percent in 2026–27, then decline to 80 percent in 2027–28, 60 percent in 2028–29, 40 percent in 2029–30, 20 percent in 2030–31, and reach zero from April 2031. This effectively shifts the deviation calculation from available capacity to scheduled generation.
The draft order also states that new wind and solar projects with bid submission dates on or after April 1, 2026, will be treated at par with conventional generators. From April 2031, existing projects will also be brought under the same framework. In addition, no payment will be allowed for over-injection when the system frequency is at or above 50.05 Hz.
CERC has invited stakeholder comments on the draft order by October 5, 2025. Access the full document here.
The featured photograph is for representation only.
