Lower GST on renewable energy equipment may trigger tariff revisions for 50 GW projects, easing costs for developers.
Around 50 gigawatts of renewable energy projects could seek tariff revision following the government’s decision to reduce the Goods and Services Tax (GST) rate on green energy equipment from 12% to 5%, according to industry experts.
Analysts at JM Financial said the GST rationalisation is “structurally positive” as it lowers capital expenditure requirements for developers, thereby aiding competitive tariffs in auctions. Discoms (power distribution companies) are also likely to benefit from lower tariffs in under-construction projects, they added.
Currently, about 158.45 GW of RE projects comprising 74.15 GW solar, 30.08 GW wind, and 53.75 GW under development stand to gain from the GST reduction. Out of these, nearly 50 GW was awarded recently. Developers may approach the Central Electricity Regulatory Commission (CERC) for tariff revision under the “change in law” provision, which accounts for unforeseen policy shifts impacting costs.
According to JM Financial, with GST now back at 5%, equity requirements for projects will drop, potentially reducing tariffs by 4–5 paise per unit. For instance, a 320 MW project costing ₹14.4 million could see tariff reduction from ₹4.5 per unit to ₹4.2 per unit.
The latest move is expected to strengthen investor confidence in India’s clean energy transition and support developers struggling with rising project costs.
