Solar, Wind, Hybrid and BESS: Understanding the Revenue Stack

Why the stack is being reweighted

Through 2026 Indian procurement moved decisively from flat energy towards delivered shape. SECI's 1 GW firm and dispatchable renewable energy round-the-clock tender discovered INR 5.25/kWh in August 2026 under 25-year PPAs for storage-backed, ISTS-connected portfolios — a price that invites direct comparison with firm thermal supply. At the same time, solar-hour surplus has weakened demand for additional unshaped daytime energy. The revenue stack has therefore stopped being a list of possible income lines and become a statement about when a project delivers.

Contracted energy sales

The base layer is energy delivered under a long-term PPA at an adopted tariff. It supports the debt case and defines the asset's institutional character. We examine tenor, tariff, take-or-pay or must-run treatment, curtailment compensation and the counterparty's payment behaviour. Contracted energy is the only layer most lenders will fully size against.

Revenue mix determines cost of capital more than headline capacity does.

Capacity, availability and firmness payments

Firm and dispatchable structures pay for availability windows rather than raw generation. That converts the underwriting question from 'how much will it generate?' to 'can it deliver in the contracted window, every day, for twenty-five years?' Availability-linked penalties, storage round-trip performance and the augmentation plan all move from operations into revenue.

• · Peak-window delivery obligations require storage sizing headroom, not just nameplate.
• · Availability shortfalls are usually penalised before they are excused.

Ancillary services and grid support

Frequency support, reserves and other system services are a genuine but market-dependent layer. They are modelled with conservative participation assumptions and no assumed growth in clearing prices. We do not permit ancillary revenue to carry fixed obligations.

Merchant sales and arbitrage

Exchange sales are a real revenue route — IEX traded volumes rose 19% year-on-year in May 2026 with day-ahead buy bids up 77% — but exchange prices are volatile and the historic spread is not a forecast. Storage arbitrage in particular is modelled at a conservative cycle count and spread, with degradation charged against every cycle assumed.

Certificates and attributes

Renewable certificates, carbon attributes and green attribute premia exist in several of our markets. We treat them as upside where they are not contracted, and as contracted revenue only where a creditworthy buyer has signed for a defined tenor at a defined price.

Deductions: degradation, curtailment, losses

Every stack has a subtraction side — module and cell degradation, storage capacity fade, auxiliary consumption, transmission losses, forecasting deviation charges and curtailment. Deductions are modelled explicitly against the same evidence base as the revenue lines, not netted into a single availability assumption.

How we weight contracted versus merchant

Our underwriting separates the two. Contracted revenue carries the capital structure; merchant and market-dependent layers are tested for their contribution under downside assumptions and treated as optionality. A project whose viability depends on the merchant layer is a merchant project regardless of what the teaser calls it.