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The growing demand for clean and sustainable energy has placed increased focus on solar power projects, particularly ground-mounted and rooftop solar photovoltaic (SRTPV) installations. As part of Karnataka’s commitment to renewable energy, the Karnataka Electricity Regulatory Commission (KERC) has proposed the determination of tariff and operational norms for solar power projects for the financial year 2025-26. This includes a detailed assessment of both ground-mounted and rooftop solar projects. The Commission earlier determined specific tariff rates applicable from April 1, 2024, to March 31, 2025, in its Tariff Order dated June 11, 2024. These rates were set for the life of the projects, typically 25 years, and applied to projects commissioned after April 1, 2024, as per the Power Purchase Agreements (PPAs). The approved levelized tariff for grid-connected megawatt-scale solar power projects was ?3.04 per unit. Projects with battery energy storage systems (BESS) were approved at ?5.66 per unit. For rooftop projects, the Commission approved ?3.20 per unit for non-domestic SRTPV installations up to the sanctioned load and ?3.79 per unit for domestic SRTPV projects ranging from 1 kW to 10 kW, both excluding capital subsidies. Under the PM Surya Ghar: Muft Bijli Yojana, capital subsidies further reduced tariffs to ?2.25 per unit for capacities up to 2 kW, ?2.43 per unit for capacities above 2 kW and up to 3 kW, and ?2.62 per unit for capacities above 3 kW. As of December 31, 2024, Karnataka had an installed solar capacity of 9,153.86 MW under PPA mode, including both ground-mounted and SRTPV plants. Of this, SRTPV projects accounted for 686.043 MW, indicating relatively low participation from smaller consumers, despite the potential advantages for both consumers and distribution licensees. Barriers to the widespread adoption of SRTPV include high upfront costs, limited financing access for residential and small commercial consumers, challenges related to intermittency and grid stability, lack of awareness about the economic and environmental benefits, and limitations in available roof space for installations. KERC facilitates energy procurement by distribution licensees from MW-scale solar projects through competitive bidding, using Commission-determined tariffs as benchmarks. For SRTPV, PPAs are executed at the tariff rates determined by KERC. Previous efforts by the Commission to promote SRTPV installations include permitting capacities up to 100% of the sanctioned load, allowing installations on government buildings, permitting hybrid grid-tied inverters with battery storage, and removing earlier capacity restrictions of 2,000 kW. The Commission has also made online applications easier for consumers installing SRTPV systems of 1 kW to 150 kW. The operational and financial parameters set by KERC for FY25 include a project cost of ?323 lakh per MW for megawatt-scale projects and ?40,000 per kW for 1 kW to 10 kW systems. The debt-equity ratio stands at 70:30, with an interest rate on debt at 10.85%. The plant’s useful life is considered 25 years, with a capacity utilization factor (CUF) of 19% for both scales. O&M expenses are ?5.624 lakh per MW and ?748.5 per kW for kilowatt-scale systems, with an escalation rate of 5.72% per annum. Depreciation is considered at 5.836% for megawatt-scale and 5.38% for kilowatt-scale projects. KERC has issued this discussion paper to engage stakeholders and reflect on market trends, ensuring that tariff determination for FY26 encourages wider solar energy adoption in Karnataka. |
