The Central Electricity Regulatory Commission (CERC) has proposed amendments to the deviation settlement mechanism (DSM) for wind, solar, and hybrid projects, effective April 2026, in a move aimed at strengthening grid stability.

The regulator has suggested shifting the DSM calculation from available capacity to scheduled generation. From 2026, deviations will be computed using the formula:

Dws% = 100 x [(Actual Injection – Scheduled Generation) / (X% of Available Capacity + (100-X)% of Scheduled Generation)]

CERC has proposed a phased reduction of the ‘x’ value from 100% in 2026 to 0% by 2031, which would increase deviation charges for renewable energy generators over time.

The DSM tolerance bands will also be narrowed—from ±15% to ±10% for wind projects, and from ±10% to ±5% for solar projects.

A Grid-India study across 16 renewable projects showed the tightening could significantly increase deviation incidents. Solar projects may face 3.5–11.1% revenue losses, hybrid projects 2.4–11.8%, while wind projects could see losses as high as 48.2% due to higher variability.

To mitigate such impacts, CERC suggested better forecasting, aggregation of projects, and operational discipline. Additionally, wind and solar projects will not be compensated for over-injections when grid frequency exceeds 50.05 Hz.

The Commission has invited stakeholder comments on the proposal until October 5, 2025.

News source: Mercom India