India clears pilot CfD scheme for 500 MW renewable capacity

The Ministry of New and Renewable Energy (MNRE) has approved guidelines for a pilot Contract for Difference (CfD) scheme covering 500 MW of renewable energy capacity. Solar Energy Corporation of India (SECI) has been designated as the nodal agency for implementation. The approval, dated March 30, 2026, follows proposals submitted by SECI in October 2025 and January 2026.

Under the framework, generators will sell electricity directly on power exchanges instead of entering into conventional power purchase agreements. SECI will settle the gap between a competitively discovered strike price and the prevailing zonal Day-Ahead Market price. It will compensate generators when market prices are below the strike price and recover excess when prices exceed it.

Market-linked structure and supply design

The pilot targets 1,500 MWh of supply per day, sourced from any three hours during non-solar periods. Generators can select their injection window to optimise returns. SECI retains the option to define specific time bands to address seasonal storage requirements and ensure adequate market liquidity.

Contracts will run for 12 years under a build-own-operate model. Bidding will follow a reverse auction using a bucket-filling approach. A cap of 125 MW per bidder has been introduced to widen participation. Gains and losses will be shared between generators and the CfD pool in a 30:70 ratio on a daily basis, with monthly reconciliation.

Financial safeguards and settlement mechanism

A stabilisation fund of Rs 76 crore has been created as a revolving buffer for settlement obligations. The government’s financial exposure is limited to this amount. SECI will replenish the fund from its own resources if the corpus is depleted or turns negative during the contract period. It can retain up to 25% of pool profits as operational income, subject to a two-year moratorium from the date of the first transaction.

The guidelines also require generators to deposit proceeds from Renewable Energy Certificates into the CfD pool when electricity is sold in brown markets.

MNRE indicated that the pilot will assess the financial, operational, and regulatory performance of the CfD model before any scale-up. At the end of the 12-year term, SECI will audit and reconcile pool accounts and seek further direction from the ministry on any subsequent rollout.

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