The CfD pilot, approved by the MNRE, will introduce a CfD model where generators receive a fixed strike price while payments are settled against market prices
SECI will tender 500 MW of renewable capacity to supply 1,500 MWh during non-solar hours, with a 125 MW cap per bidder
Projects will operate under 12-year BOO contracts and sell electricity on power exchanges
India’s Ministry of New and Renewable Energy (MNRE) has cleared a 500 MW pilot program for renewable energy contracts for difference (CfD), backed by a INR 76 crore stabilization fund. The pilot aims to test the financial, operational, and regulatory framework of CfDs in India’s market environment.
The CfD mechanism will mark a shift from traditional long-term power purchase agreements (PPA) for the Indian market. Several European nations already follow this model. The world’s largest renewables market, China, too, shifted from a lucrative feed-in-tariff (FIT) mechanism to CfD in June 2025 (see World’s Biggest Solar Market Moving Towards CfD Mechanism).
Under the CfD mechanism, renewable energy producers receive a fixed price for the electricity generated by their plants. If the market price falls below this level, the government pays the difference; if it rises above it, the producer returns the surplus.
The nodal agency for this pilot, the Solar Energy Corporation of India (SECI), will launch a 500 MW renewable energy capacity tender for the supply of 1,500 MWh during non-solar hours daily. There will be a cap of 125 MW corresponding to 375 MWh per bidder, to ensure broader participation.
Projects will be developed on a build-own-operate (BOO) basis, with winners to securing 12-year contracts. On completion of the 12-year period, the renewable energy generator will be free to enter into a bilateral/PPA contract.
Power will be sold on power exchanges, with SECI settling the gap between the competitively determined strike price and the market reference price. Settlements will be based on zonal Day-Ahead Market (DAM) prices. SECI will manage pay-ins and pay-outs with the stabilization fund under the pilot.
With this scheme, the ministry said the mismatch between renewable energy supply and market demand/prices will decrease, as it will establish stable pricing. For developers, it will minimize risk and provide greater revenue certainty.
By December 2025, India expanded its variable renewable energy capacity to more than 190 GW. PPAs have so far helped attract private investment and reduce costs. As the power market evolves, SECI explains in an MNRE office memorandum dated March 30, 2026, CfD can support renewable energy sales in DAM and RTM markets.
CfDs provide generators with a fixed strike price while settling against market prices, helping ensure stable revenues while keeping the electricity market competitive and flexible.
The Minister of New and Renewable Energy, Pralhad Joshi, announced the pilot on his X account and said, “By introducing a price assurance mechanism, the initiative will help ensure revenue certainty, market stability and greater confidence for renewable energy developers.”