Karnataka Proposes Capital Cost of ₹37.33 Million/MW for Solar Projects

The KERC has considered the imposition of safeguard duty and GST while computing the cost


The Karnataka Electricity Regulatory Commission (KERC) has proposed a capital cost of ₹37.33 million (~$0.54)/MW for solar photovoltaic (PV) projects to be developed in Karnataka. The KERC proposal follows a discussion paper issued by the commission in February 2019 in which it had proposed a lower ₹31.4 million (~$0.44 million)/MW as the capital cost for solar PV projects.

Higher capital cost proposed is the only deviation from the discussion paper issued earlier. The discussion paper focused on setting tariff for solar PV power projects, including rooftop solar projects for the financial year 2020.

The Karnataka commission had issued the discussion paper as it was of the view that the growth in the rooftop solar sector has not been encouraging with only 154 MW of projects installed and commissioned in the state. Moreover, most of these installations are of larger scale and despite a huge potential in the domestic consumer segment, the interest from the smaller consumers has not been very enthusiastic.

The commission will hold a public hearing on the matter on June 25, 2019, in Bangalore.

According to the Mercom India Solar Project Tracker, Karnataka has installed large-scale solar capacity of over 5.3 GW and has a development pipeline of ~2.5 GW, making it the leading solar state of the country. But then again, these are mostly utility-scale solar PV projects.

Earlier, Mercom reported about the KERC setting the generic tariffs for grid-connected MW-scale solar projects of capacity less than 5 MW at ₹3.05 (~$0.0447)/kWh. The generic tariff for rooftop solar projects with a capital subsidy is ₹3.56 (~$0.052)/kWh. These tariffs were applicable until March 31, 2019, and now a pragmatic approach in tariff setting for the next year is required.

Keeping the curtailment issues in focus, the KERC in April 2019 had written to Karnataka Renewable Energy Development Limited (KREDL) stating that there is no need to procure power from solar projects in the near future to meet RPO or general demand, as it will have an effect on grid stability, will not be good for DISCOMs (who will be required to pay for the fixed cost for curtailing thermal power) and also become a tariff burden on the consumers.

Volatilities prevalent in the sector must be considered and comments and suggestions reviewed and considered before arriving at a conclusion. The first step towards this has been taken by the KERC, and now it is up to the stakeholders to do the needful which would help in the growth of solar, especially rooftop projects in the state.