Himachal Pradesh Proposes ₹3.54/kWh Levelized Tariff for Biomass Projects

Himachal Pradesh Proposes ₹3.54/kWh Levelized Tariff for Biomass Projects

April 13, 2026

Himachal Pradesh is taking a significant step toward diversifying its renewable energy basket beyond hydropower. The Himachal Pradesh Electricity Regulatory Commission (HPERC) has proposed a generic levelized tariff of ₹3.54 (~$0.038)/kWh for biomass gasifier power projects up to 5 MW. This new rate is intended to incentivize the use of agricultural and forest waste as a consistent, baseload-capable energy source for the state’s grid starting in the 2026-27 financial year (FY 2027).

The proposed framework is highly specific to ensure technical efficiency. The tariff applies only to grid-connected projects using new plant and machinery and 100% producer-gas engines—a technology that converts solid biomass into a clean-burning fuel gas. To qualify for this ₹3.54/kWh rate, projects must be commissioned by March 31, 2027, and maintain a high standard of performance. If a plant’s annual generation falls below 10% of its expected capacity (a normative 85% plant load factor), it risks losing the levelized tariff benefit. This “performance-linked” approach ensures that only well-maintained, high-output projects receive government support.

From a financial perspective, the Commission has benchmarked the costs against national standards, setting the capital cost at approximately ₹67.7 million per MW. While the fixed cost of the project is locked in at ₹3.53/kWh for its 25-year lifespan, the variable cost—which accounts for the actual purchase of biomass fuel—is pegged at ₹6.33/kWh for the upcoming year. For developers, this provides a clear long-term roadmap for return on equity and debt servicing. For the state, it turns a potential environmental hazard—excess forest biomass—into a reliable source of decentralized power that can complement the state’s seasonal hydro and solar output.