Renewable-Energy Project DSCR Stress Test: Generation, Tariff, Curtailment and Debt-Service File
By Ravi Sisodia · Reviewed by CA Divyanshu Sengar · Updated 5 October 2026
2-minute summary
- CERC's 2024 RE tariff regulations provide financial and technology assumptions for regulated tariff purposes, including a normative 70:30 debt-equity framework and working-capital components; a project finance model must still use its actual PPA, debt documents and operating facts.
- Curtailment risk should be split between compensated and uncompensated scenarios based on the governing contract/regulatory position rather than treated as automatic lost revenue.
- Receivable delay can depress DSCR even when annual generation is on budget, so the model should show both P&L and cash timing.
- For floating-rate debt or refinancing, interest sensitivity should be layered over generation and collection stress rather than run in isolation.
Current position
Control and evidence map
| # | Control | What the file should show |
|---|---|---|
| 1 | Generation case | P50/base, downside resource case and availability/PLF-CUF assumptions. |
| 2 | Revenue bridge | Contract tariff, deemed generation/curtailment terms, deductions and taxes. |
| 3 | Collection stress | Receivable days, payment security and overdue pattern. |
| 4 | Operating cash | O&M, insurance, land/lease, spares and working-capital needs. |
| 5 | Debt service | Principal, interest, reserve accounts, reset dates and covenant definition of CFADS/DSCR. |
Worked example
A 100 MW project meets its annual generation budget but the offtaker pays 90 days later than modelled. EBITDA may appear close to plan while quarterly debt service cash is short. The stress test should therefore move receivable days independently, show reserve-account draw and calculate DSCR using the exact financing definition rather than a generic spreadsheet formula.
Common mistakes
- Using CERC normative assumptions as though they were the project's loan terms.
- Running only a generation downside and ignoring collections.
- Assuming every curtailment event is compensated.
- Calculating DSCR from EBITDA rather than the financing document's cash definition.
Frequently asked questions
Is 70:30 debt-equity mandatory for every renewable project?
CERC uses a normative 70:30 ratio for tariff determination under the cited regulations; actual project financing can differ.
What is the most common hidden DSCR risk?
Cash timing: delayed receivables can create a covenant problem without an equivalent annual revenue shortfall.
How should curtailment be modelled?
Use the PPA/regulatory entitlement and create compensated, delayed-compensation and uncompensated cases where relevant.
Which document controls DSCR?
The executed financing documents and their definitions, tested against actual/projected cash flows.
Official sources
- Central Electricity Regulatory Commission - CERC Terms and Conditions for Tariff determination from Renewable Energy Sources Regulations, 2024 (2024-07-16)
- Central Electricity Regulatory Commission - Current Regulations (2026)
Disclaimer
Educational and professional reference only; confirm the current law, rates and the facts of your case before relying on this page.