The Punjab State Electricity Regulatory Commission (PSERC) has approved a revised tariff for the 6 MW biomass-based power plant operated by Malwa Power Pvt. Ltd., enabling the project to continue operations for another 10 years beyond the expiry of its original power purchase agreement (PPA). The decision, issued on March 27, 2026, follows a petition filed by the company seeking tariff determination for the extended operational period, as permitted under its agreement.
The plant, which is in the Muktsar district, started working in 2005 and had been providing electricity to Punjab State Power Corporation Limited (PSPCL) under a 20-year PPA that ended in April 2025.
Tariff Increased to ₹5.224 per kWh
Under the revised order, PSERC has set the tariff at ₹5.224 per kWh for FY 2025–26, replacing the earlier interim tariff of ₹3.50 per kWh for the Biomass Power Plant. The revision represents an increase of nearly 49%, significantly improving the project’s revenue outlook.
The regulator also said that the tariff would include a 5% annual increase in the variable cost part, which is meant to cover the rising costs of fuel and operations that come with generating power from biomass.
Revenue Recovery and Future Projections
With the new tariff in place, Malwa Power is expected to get back about ₹5.8 crore in extra money for electricity it sold between May 2025 and February 2026, when it was paid at the lower interim rate.
Looking ahead, the company has projected annual revenue of around ₹24.31 crore from power generation in FY 2026–27, assuming plant operations at 85% capacity utilisation. In addition, a biomass pellet manufacturing unit being developed at the same site is expected to generate approximately ₹23.40 crore annually.
Combined, both operations could yield close to ₹48 crore in yearly revenue, strengthening the company’s overall financial position and supporting long-term sustainability.
Concerns Over Cost Calculations and Potential Appeal
Even though the tariff went up, the company is still worried about how the fixed and variable costs were figured out. It said that the approved rates are still lower than expected and may not fully cover current operating costs.
As a result, Malwa Power is considering approaching the Appellate Tribunal for Electricity (APTEL) to seek further revision in line with updated regulatory norms. Company officials indicated that while the revised tariff enhances financial viability, additional adjustments would be necessary to align returns with actual costs.
Boost for Biomass Sector Amid Policy Push
The decision shows that regulators like PSERC are still in favour of biomass based power projects, which are important for turning waste into energy and generating energy in rural areas. As part of India’s larger plan to switch to clean energy, the industry is putting more and more focus on biomass and bioenergy solutions.
The new tariff from PSERC and operational extension should help keep generation going while also helping to develop sustainable energy in Punjab.
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