Introduction
The Uttarakhand Electricity Regulatory Commission (UERC) has officially released the new solar energy tariff for FY 2025–26, bringing major changes for rooftop solar consumers. While the announcement aims to align tariffs with market realities, the decision has sparked disappointment among new solar adopters.
New rooftop solar owners will now sell excess electricity at much lower rates, whereas existing plant owners will continue to enjoy older, higher tariffs. This change has raised debates about fairness and the future of small-scale solar in the state.
Background of Uttarakhand’s Solar Energy Development
Uttarakhand has been a progressive state when it comes to adopting clean and renewable energy. Over the last decade, government programs like the Rooftop Solar Scheme encouraged thousands of homes and businesses to install solar panels.
Previously, the state offered attractive rates for selling back surplus energy to the grid—typically ₹4 per unit or more. These incentives helped make solar energy financially viable for individuals and small institutions.
However, as national solar costs have fallen and more people are installing systems, regulators have revisited the tariff structure to make it more “realistic.”
What Has Changed in 2025–26
The new tariff announcement for 2025–26 marks a turning point. The UERC has reduced the electricity buyback price for new rooftop solar installations, effective from April 1, 2025.
Under the new framework:
- New solar plants will sell power at ₹2 per unit, down from over ₹4 previously.
- Old plants will continue with their existing tariff agreements.
The result is a significant drop in the financial benefit for new rooftop solar consumers.
The Impact on New Rooftop Solar Owners
For homeowners planning to install solar systems in 2025 or later, the change is a big hit. Selling electricity at ₹2 per unit instead of ₹4 cuts their return on investment nearly in half.
This could slow down new solar adoption, especially among middle-class households that rely on the buyback tariff to offset installation costs.
Imagine investing ₹1 lakh in a rooftop solar system expecting a 5-year return, only to find that your earnings are reduced by 50%. That’s the situation new consumers now face.
Existing Solar Plant Owners – No Change
Thankfully, those who already installed solar systems before April 2025 are unaffected. They will continue to receive the older, higher rates as per their Power Purchase Agreements (PPAs).
This approach ensures fairness for early adopters but creates a two-tiered system where new consumers face less favorable conditions.
Detailed Breakdown of New Tariff Rates
Solar PV Plant Rates
- Gross Tariff: ₹4.27 per unit
- Accelerated Depreciation Benefit: ₹0.16 per unit
- Net Tariff: ₹4.10 per unit
Capital cost per megawatt has been estimated at ₹280.64 lakh, including PV modules, land, civil work, and electrical connections.
If developers receive government subsidies, tariff rates will be reduced further by ₹1.49–₹1.59 per unit per 1% subsidy received.
Solar Thermal Plant Rates
- Gross Tariff: ₹12.47 per unit
- Net Tariff: ₹11.91 per unit
- Capital Cost: ₹1200 lakh per MW
Solar thermal systems, though costlier to install, produce higher efficiency and are preferred for industrial applications like heating and drying.
Grid-Interactive Rooftop and Small Solar Systems
For residential and small business consumers under net metering, the new tariff is fixed at ₹2 per unit, regardless of any subsidy.
This is a steep decline from the earlier rate of ₹4 or more, marking a substantial financial adjustment.
Tariff Comparison Across Indian States
UERC also benchmarked rates against other states:
- Uttar Pradesh: ₹2 per kWh
- Gujarat: ₹2.76 per kWh
- Maharashtra: ₹2.82 per kWh
This shows that Uttarakhand’s new rate aligns with national averages, though it remains less favorable for home users compared to states offering incentives.
Capital Cost and Tariff Calculation
The new tariff structure is based on detailed cost modeling.
Factors considered include:
- Equipment cost (PV modules, inverters, cables)
- Civil and electrical setup
- Land value
- Maintenance cost
- Depreciation and interest rates
The Accelerated Depreciation (AD) benefit helps developers reduce taxable income, resulting in slightly lower tariffs for projects availing it.
Solar PV Plant: Cost and Returns Explained
With an estimated capital cost of ₹280.64 lakh per MW, developers can expect a moderate payback over 6–8 years. The ₹4.10 per unit net tariff provides steady returns but depends heavily on system efficiency and sunlight availability.
The challenge lies in maintaining financial feasibility while balancing consumer affordability.
Solar Thermal Plant: An Expensive Yet Efficient Option
Solar thermal systems remain niche due to their high installation cost but provide unmatched heat generation capacity. With tariffs at nearly ₹12 per unit, they serve industrial and large-scale applications where consistent heat energy is required.
Rooftop Solar Tariff Cut: A Blow to Home Users
Residential users, once the biggest beneficiaries of solar net metering, now face the toughest challenge.
At ₹2 per unit, the payback period extends significantly, making rooftop solar less lucrative for individual households.
Many experts argue that this policy may discourage citizens from embracing renewable energy—contrary to India’s 2030 clean energy goals.
Reactions and Expert Opinions
Industry experts and consumers have voiced mixed reactions.
- Solar associations argue that the cut will harm small-scale adoption.
- Regulators, on the other hand, claim that the change aligns tariffs with falling solar equipment prices and ensures fairness to all stakeholders.
Some experts suggest offering installation-based incentives instead of cutting the per-unit tariff, which could balance both affordability and motivation.
Future of Solar Energy in Uttarakhand
Despite the short-term setback, Uttarakhand’s solar journey is far from over. With declining equipment costs, improved battery storage, and growing awareness, the state still holds immense potential.
The focus may now shift from financial incentives to technological efficiency and community-scale solar projects.
Recommendations for Solar Investors
If you’re planning to invest in solar in Uttarakhand:
- Install before April 2025 if possible to lock in higher rates.
- Consider larger systems that reduce dependency on buyback income.
- Use high-efficiency panels for faster ROI.
- Explore government subsidies and state-level grants.
- Monitor UERC announcements for future revisions.
Conclusion
Uttarakhand’s 2025–26 solar tariff revision represents a shift from generous incentives to market-driven pricing. While it aligns with national standards, it undeniably impacts new rooftop solar users the most.
The state must now find a balance between encouraging green energy and ensuring equitable financial returns for all consumers.
