Solar Tilt

Karnataka makes good progress but needs to broaden its renewables’ base

Karnataka has witnessed an unprecedented growth in renewable energy installations over the past few years, fuelled by the state government’s initiatives  for providing 24×7 power to all and improving energy security in the long run. Karnataka has immense renewable energy potential and the state government is leaving no stone unturned in ensuring maximum utilisation of these resources. According to Karnataka Renewable Energy Development Limited (KREDL), around 9,029.89 MW of renewable energy capacity in the state has been commissioned as of January 2018, accounting for 41.74 per cent of its total installed power capacity.

The Karnataka Electricity Regulatory Commission (KERC) has recently released  draft regulations to increase the solar renewable purchase obligation (RPO) for discoms, as per the Fifth Amendment to the KERC (Procurement of Energy from Renewable Sources) Regulations, 2017. These regulations propose an increase in the solar RPO from 1.25 per cent to 3.5 per cent for 2017-18 and from 1.75 per cent to 6.75 per cent for 2018-19. Even with solar costs declining, this would mean an increase in tariff for consumers, as all the discoms have sought tariff hikes ranging from 82 paise to 162 paise per unit, in their tariff petitions for the year 2018-19. The regulations proposed no change in the non-solar RPO.

Karnataka’s Draft Karnataka Renewable Energy Policy 2014-20, covering all renewable energy sources  except solar, targets a minimum renewable energy capacity addition of 4,000 MW during the period. It also aims to attract private sector investments on a larger scale. The policy encourages the repowering of old wind power plants and the hybridisation of solar and wind. In addition, it has also proposed to set up a centralised monitoring cell for better coordination and improved planning of renewable energy projects. Under the policy, a green energy fund called the Akshaya Shakthi Nidhi will be set up to facilitate renewable energy financing and energy conservation in the state by levying a green energy cess on electricity supplied to industrial and commercial establishments. As per the policy, the wheeling, banking, reactive and transmission charges will be applicable as determined by KERC from time to time.

Karnataka is also one of the first few states in India to introduce a specific policy for electric vehicles. The Karnataka Electric Vehicle and Energy Storage Policy, 2017 directs discoms to permit the use of renewable energy at low connection costs and zero wheeling charges for powering electric vehicle charging stations. This is expected to further drive renewable energy uptake in the state.

Emphasis on solar

The state has a commissioned solar photovoltaic (PV) capacity of about 2,665 MW as of January 2018, which is roughly 30 per cent of the total renewable energy capacity in the state. It also has a dedicated policy for solar energy projects, the Karnataka Solar Policy, 2014-22, which estimates the solar potential in the state to be above 24,700 MW. The policy targets an installed solar capacity of minimum 6,000 MW by 2021, to be added in a phased manner. The policy is also promoting distributed solar projects to offset the peak electricity demand and stabilise the local grid. The policy has introduced the concept of gross metering and solar-wind hybrid under rooftop generation in addition to the net metering provisions for various consumer categories. All wheeling, banking, transmission and cross-subsidy charges will be determined by KERC from time to time.

During the past year, about 1,700 MW of solar capacity has been commissioned in Karnataka. This includes projects installed on farmer-owned land, private solar parks, mega solar parks, captive power plants as well as projects installed under the National Solar Mission. Of these, nine solar projects aggregating 285 MW of capacity were commissioned in January 2018 itself.

Besides ground-mounted solar systems, the state has a target of 2,300 MW of grid-connected solar rooftop capacity by 2022. Under the Surya Raitha scheme, farmers having grid-connected solar pumps can avail of net metering benefits by selling surplus power to the grid. The state also has another solar pump scheme, where a beneficiary has to pay Rs 100,000 for installing a solar pump, and the remaining cost is borne by the state. About 1,161 solar pumps have been installed under this scheme as of December 2017.

Meanwhile, KREDL and the SECI have formed a joint venture called Karnataka Solar Power Development Corporation Limited to develop a 2,000 MW mega solar park spread over 11,000 acres of land at Pavagada taluk in Tumkur district. Of the total capacity, around 600 MW has already been commissioned as of January 2018. KREDL has also issued a tender for the development of grid-connected ground-mounted projects aggregating 1,200 MW (50 MW x 24 blocks) under the build-own-operate model in the Pavagada solar park.

Further, in December 2017, KREDL conducted an auction for 860 MW of solar capacity to be installed in 38 taluks across the state. It has identified 11 winners and awarded a total capacity of 760 MW under this tender. The Shapoorji Pallonji Group won the highest capacity of 185 MW followed by ACME (106 MW), ReNew Power (99 MW) and Asian Fab Tec (85 MW). The winning bidders had quoted tariffs in the range of Rs 2.94-Rs 3.45 per unit.

Other renewable energy sources

Karnataka has installed only about 3,846 MW of wind projects as of January 2018 against the total allocated capacity of 17,319 MW. Of this, about 700 MW was installed in 2017, with individual project sizes ranging from 1 MW to 34 MW. The only large wind project installed during this period was a 100 MW project in Bijapur owned by Devarahipparagi Wind Power Private Limited. Moreover, of the 700 MW of wind capacity installed in 2017, only 18 MW was installed after March 2017. This trend stands in stark contrast to solar power development in the state. In fact, in the wind segment, more capacity has been cancelled than commissioned. In 2017, Bangalore Electricity Supply Company Limited (BESCOM) cancelled its power purchase agreements (PPAs) for 75.6 MW of wind projects bid out in 2015. This was due to the decline in wind tariffs after competitive bidding for wind was carried out by SECI, which invited a regulatory order from KERC directing the developers to lower their tariffs. However, the state government overruled the regulatory order in October 2017, directing KERC to approve all the PPAs at the awarded tariff. The state government was determined not to discourage private investment in the state.

Meanwhile, in the small-hydro segment, only three projects aggregating 8.5 MW were commissioned in 2017. However, this is more than the allocated capacity of 3 MW in 2017. In the biomass space, no new project was installed during the year while 21 MW was installed in 2016. A similar trend was witnessed in the waste-to-energy segment, where projects had been allocated, but none were installed. A single project of 14 MW was installed in the cogeneration segment, while the capacity allocated was comparatively quite large. The lack of interest in installing biomass projects among private entities could be attributed to the high costs and time associated with fuel collection, and the availability of cheaper solar power in the state.

Discom performance

Karnataka has a total of five discoms, out of which Chamundeshwari Electricity Supply Corporation Limited, BESCOM and Mangalore Electricity Supply Company Limited received an “A” rating, Hubli Electricity Supply Company Limited received a “B+” rating and Gulbarga Electricity Supply Company Limited received “B”, in the Fifth Annual Integrated Rating of state discoms undertaken by the Ministry of Power in May 2017. These good ratings are an indicator of the state discoms’ efforts in improving their financial and operational health under the Ujwal Discom Assurance Yojana (UDAY).

The state discoms reduced their aggregate technical and commercial losses from 18.7 per cent in 2015 to 15.2 per cent in 2017, as per their commitments under UDAY. They have also improved their billing and collection efficiency, and have deployed extensive programmes to tackle power theft. Increase in the renewable energy generation and the promotion of energy efficiency programmes in the state have helped reduce power procurement costs for discoms and increase their revenue generation.


Karnataka was the first state to introduce a solar energy policy and implement a utility-scale solar project in the country. It has come a long way since then with considerable capacity additions, owing to the state government’s commitment to meet the aggressive renewable energy targets, and ensure energy security for all consumers. While the state is aggressively expanding its solar power capacity, the other resources need greater attention. The draft renewable energy policy of 2014 has still not been approved, and discoms are shying away from signing new wind PPAs. The state is yet to adopt the competitive bidding process for project allocation in the wind power segment.


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