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					</table><p>The Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) has proposed revising the methodology for determining congestion charges in real-time interstate transmission.</p>
<p>The Commission has invited comments and suggestions from stakeholders by April 6, 2026.</p>
<p>Under the proposed framework, congestion charges would no longer be fixed but instead calculated dynamically as 1.5 times the applicable deviation settlement mechanism (DSM)-based rate for a given time block.</p>
<p>Depending on the entity and the nature of deviation, this base rate could be the reference charge rate, the contract rate, or the normal rate <a href="https://www.mercomindia.com/cerc-dsm-regulations" target="_blank" rel="noopener">specified</a> under the DSM Regulations.</p>
<p>The Commission has proposed a minimum congestion charge of ₹3 (~$0.0324)/kWh and a maximum of ₹10 (~$0.108)/kWh, thereby introducing both a floor and a ceiling to the pricing mechanism.</p>
<p>Congestion charges are applied as a commercial tool to maintain grid stability by discouraging entities from deviating in ways that strain transmission corridors.</p>
<p>Under the existing framework, these charges have remained at ₹5.45 (~$0.0590)/kWh since 2010. This rate was originally determined based on the difference between the maximum Unscheduled Interchange (UI) charge of ₹7.35 (~$0.0795)/kWh and the UI charge of ₹1.92 (~$0.0207)/kWh at a system frequency of 50 Hz, with the intent of discouraging overdrawal at lower frequencies and incentivizing alternative generation sources.</p>
<p>The Commission has now observed that the assumptions underlying this framework no longer hold. Over the past 15 years, the electricity sector has undergone substantial transformation, including the replacement of the UI regime with the DSM Regulations, 2024, a sharp increase in renewable energy capacity, and the introduction of market-based mechanisms such as the Real-Time Market alongside the Day-Ahead Market.</p>
<p>In light of these developments, CERC concluded that the existing congestion charge rate requires a revision to remain effective in managing grid conditions.</p>
<p>The rationale for linking congestion charges to DSM rates is to ensure that the combined financial impact of deviation and congestion charges is sufficiently high to act as a deterrent against grid stress, particularly in situations of overdrawal at frequencies below 50 Hz. At the same time, the introduction of a minimum charge addresses situations where DSM rates may be negligible or zero, while the ceiling ensures that charges remain within reasonable bounds.</p>
<p>The order reiterates that congestion charges will continue to apply to entities responsible for congestion through overdrawal, under-drawal, over-injection, or under-injection, and will be levied in addition to DSM deviation charges. The determination of which entity is responsible for congestion remains linked to system frequency, with overdrawal in importing regions typically causing congestion at frequencies below 50 Hz, and excess injection or under-drawal in exporting regions contributing to congestion at higher frequencies.</p>
<p>At the same time, the Commission has retained an important exception, which is that congestion charges will not be levied where congestion arises due to forced outages in transmission corridors after schedules have already been finalised. In such cases, grid operators such as the various load dispatch centres are expected to manage the situation through operational instructions in the interest of grid security.</p>
<p>The proposal follows representations from stakeholders who sought a review of the applicability of the congestion charge to renewable energy generators. These stakeholders argued that renewable generation is inherently variable, that DSM regulations already provide certain relaxations for renewable deviations, and that the imposition of congestion charges could result in double penalisation.</p>
<p>The CERC, however, refused to exempt renewable energy generators from congestion charges. It emphasized that congestion is fundamentally an issue of grid security and that all entities contributing to it must be treated uniformly. Exempting any category of generators would undermine the principle of non-discriminatory treatment and weaken the effectiveness of congestion management as a system operation tool.</p>
<p>Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.</p>


CERC Proposes Grid Congestion Charges of ₹3-₹10/kWh


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					</table><p>The Central Electricity Authority (<a href="https://cea.nic.in/?lang=en" target="_blank" rel="noopener">CEA</a>) has directed 20 renewable energy projects that had received provisional or conditional connectivity approvals to submit compliance reports, specifying the capacity of non-compliance that should be curtailed or suspended until they fully meet the regulatory requirements.</p>
<p>The CEA Chairperson had convened a meeting with stakeholders in the renewable energy sector to address the non-compliance with the Technical Standards for Connectivity to the Grid Regulations.</p>
<p>Specific deadlines were initially set for compliance as part of the conditional or provisional connectivity approvals granted to these developers. Through mutual agreement, these deadlines were <a href="https://www.mercomindia.com/renewable-developers-must-comply-connectivity-rules" target="_blank" rel="noopener">extended</a> to September 30, 2023, to seamlessly integrate renewable energy into the national grid and achieve the government&#8217;s renewable energy generation targets. However, extending compliance deadlines posed a challenge for numerous developers.</p>
<p>The conditional and provisional connectivity approvals were granted based on the undertakings made by the developers themselves. The agreed-upon timeline for compliance was extended, but those who could not meet the extended deadlines should have promptly communicated their inability to do so and taken appropriate actions.</p>
<p>The meeting also discussed the case of Azure Power Maple, which had sought an extension for installing the reactive power compensation device for its 300 MW solar project in Bhadla, Rajasthan.</p>
<p>It was emphasized that all developers must transparently share their actions to meet existing regulations and honor their commitments.</p>
<p>Suggestions, including the possibility of renewable projects requesting a reduction in their connectivity capacity to match their compliance capabilities, were also discussed.</p>
<p>Azure Power Maple had planned to install only 50% of the required reactive power capacity, but no additional capacity was commissioned despite missing two committed deadlines.</p>
<p>In contrast, several other developers, including Tata Power and SBSR cleantech, reported full compliance with existing regulations.</p>
<p>Grid-India revealed that out of 20 renewable projects issued provisional or conditional first-time charging approvals, 17 had either fully or partially complied. Two additional projects were in various stages of execution to meet reactive power compensation requirements. However, Azure Power Maple has yet to procure the necessary devices to address reactive power requirements.</p>
<p>In February, the Central Electricity Regulatory Commission <a href="https://www.mercomindia.com/cerc-new-deviation-guidelines-maintain-grid-security" target="_blank" rel="noopener">issued</a> new guidelines to supplement the Deviation Settlement Mechanism Regulations 2022 to maintain grid security. These regulations came into force last December after wide-frequency fluctuations in the grid occurred. The regulator stipulated certain measures to contain frequency within the operating band.</p>


CEA Directs Renewable Developers to Report Compliance with Grid Connectivity Rules

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