Karnataka Extends Existing Tariff Structure for Solar Projects Until March 31, 2021

The regulations were set to expire in April 2020


The Karnataka Electricity Regulatory Commission (KERC) has extended the validity of the existing tariff structure determined by the Commission in August 2019. The earlier regulation had expired in April 2020.

The extension has been provided for one year from April 01, 2020, to March 31, 2021. The extension will facilitate the seamless development of solar projects, including rooftop solar installations in the state.

According to the order, the tariff will be applicable for all new solar projects for which power purchase agreements (PPAs) have been entered on or after April 01, 2020, and projects which will achieve commercial operation on or after April 01, 2020.

Various states, including Karnataka, have been promoting the generation of power from renewable energy sources by determining the generic tariffs based on several operational and financial parameters.

The Commission, in its order dated August 01, 2019, had determined a levelized tariff for the grid-connected solar power projects of less than 5 MW capacity at ₹3.08 (~$0.041)/kWh. The tariff for solar projects of 1 kW to 2,000 kW was fixed at ₹3.07 (~$0.04)/kWh (without capital subsidy) and ₹2.32 (~$0.031)/kWh (with capital subsidy).

Similarly, the tariff for solar rooftops of capacity 1 kW to 10 kW for domestic consumers stood at ₹3.99 (~$0.051)/kWh (without capital subsidy) and ₹2.97 (~$0.039)/kWh (with capital subsidy). These tariffs apply to the entire life of the projects, which is 25 years.

The Commission noted that as of March 2020, rooftop solar projects accounted for only 240.14 MW capacity, which was way off the target of 2.4 GW that is to be achieved by 2022. Taking into account all the factors, the Commission decided to continue with the existing tariff structure for another year ending on March 31, 2021.

According to Mercom’s India Solar Project Tracker, Karnataka has an installed large-scale solar capacity of over 7.3 GW. It has a development pipeline of ~340 MW, making it the leading solar state of the country.

Recently, KERC issued an order stating that the generic tariff for wind power projects will continue to remain the same at ₹3.26 (~$0.04)/kWh as determined in February 2019. The Commission said that the tariff of ₹3.26 (~$0.04)/kWh will also be the ceiling tariff for tariff-based reverse bidding for wind projects. The tariff will be effective from April 1, 2020, to March 31, 2021.