India’s New Green Power Rules Could Impact Renewable Sector Investments

India’s proposed tightening of rules for renewable energy producers could impact company earnings and discourage new investments, according to industry feedback reviewed by Reuters. The Central Electricity Regulatory Commission (CERC) released a draft in September 2025 that would enforce stricter compliance for wind and solar producers under the Deviation Settlement Mechanism, which governs how much deviation is allowed between promised and actual power generation.

Starting April 2026, the revised framework would gradually reduce the permissible deviation margin each year until 2031, when renewable energy producers would be treated on par with conventional power plants. The aim is to improve forecasting accuracy and grid reliability as renewables take up a larger share of India’s power mix.

However, industry bodies warn that the proposed changes could severely affect wind projects, which rely on variable weather conditions. The Wind Independent Power Producers Association said in a letter that some projects could lose nearly half of their revenues due to the new penalties, especially older ones built under earlier rules. The association has already challenged last year’s deviation regulations in court, citing financial risks for developers.

Similarly, the National Solar Energy Federation of India cautioned that the rules could undermine the financial viability of solar projects and discourage future investment in India’s clean energy expansion. The concerns come as India targets doubling its non-fossil fuel power capacity to 500 gigawatts by 2030, a key step in its renewable energy transition.

New green-power rules directly affect the revenue certainty renewable investors have been counting on, and small changes in cross-subsidy, storage integration or dispatch cascade quickly into project IRRs. Our energy-transition and responsible-investment teams help developers and financiers evaluate what these rule changes mean for pipeline sequencing and offtake structure.