MNRE Challenges Uniform DSM Norms for Renewable Projects

The Ministry of New and Renewable Energy (MNRE) has proposed distinct Deviation Settlement Mechanisms (DSM) for wind and solar projects to the power regulator. MNRE believes that equating renewable energy facilities with conventional power plants could lead to increased financial risks and hinder project feasibility as per The Economic Times news report. 

MNRE's Argument for a Tailored DSM Framework 

In its feedback on the draft Deviation Settlement Mechanism and Related Matters (Third Amendment) Regulations, 2026, the MNRE highlighted the inherent weather-dependence of renewable energy sources. It noted that such energy cannot be measured against the predictable output of thermal and other traditional energy generators. 

Financial Implications and Project Bankability 

The draft regulations propose similar DSM charges for wind, solar, and other electricity sellers. Without a tailored approach, the MNRE fears increased financial risks for renewable projects, possibly affecting their bankability. This might force developers to adjust tariffs upwards due to greater uncertainties. 

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Recommendations for Technology-Specific DSM Framework 

The ministry advocates for a graded DSM framework specifically designed for renewable energy projects. This would consider factors like available capacity and the readiness of forecasting systems, renewable energy management centres, scheduling platforms, ancillary markets, and storage facilities. 

Exemptions for Smaller Generators and Flexible Offsets 

The MNRE also seeks exemptions or extended transition periods for smaller renewable generators and suggests weather-based DSM calculations. Additionally, it recommends allowing developers to offset deviations through self-purchase or third-party methods, such as those provided by Grid India. 

Conclusion 

The MNRE’s push against uniform DSM norms underscores the distinct nature of renewable energy generation compared to traditional methods. It highlights the need for a graded DSM framework focusing on technology-specific requirements and accommodating smaller renewable generators. 

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