Karnataka is the next hub for solar projects in India



Karnataka has recently closed a bid for implementing 500MW of solar projects and there is a new order from the regulatory that will enhance the prospects of solar project development in the state under open access and Independent power development.

Solar power development in the state of Karnataka has received a major fillip after Karnataka Electricity Regulatory Commission (KERC) has released a new order on wheeling, banking and cross subsidy surcharge for solar power generators. The order exempts the payment of wheeling, banking and cross subsidy surcharge for solar projects commissioned before 31st March 2018 for a period of 10 years from the Commercial operation Date (CoD). The order was passed in the back drop of a discussion paper and a subsequent public hearing held by KERC where solar power developers expressed their concerns on high capital cost compared to other renewable energy sources and lack of clarity on an earlier order. KERC’s order for other renewable energy projects have a 5% wheeling and 2% banking charges and by exempting these charges for solar projects KERC intends to promote solar power development in the state.



The order is a step in the right direction in achieving the solar policy target of 1600MW in Karnataka by 2021. The 10 year period is aimed at providing clarity to the developers for their financial calculations during their debt-repayment period. Industries who wish to install power plants for their captive consumption will also benefit through this order. Power tariffs for Industries in Karnataka is at an average of 6/unit and going by the trend the power tariffs are expected to rise by 4% on an average annually. Large industries will now be encouraged to invest in their captive power plants and also claim accelerated depreciation benefit thereby ensuring reduced power costs and securing long time reliable power. Industries can also look forward to the net metering policy which is expected soon, where industries can install solar projects on their roof-tops and sell the excess energy after their consumption to the grid at a determined tariff. With the policy measures now in place developers will be queuing up to setup projects in Karnataka and the state will soon see a surge in the solar installations.

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