The Karnataka Electricity Regulatorcy Commission (KERC) has proposed a new benchmark tariff of Rs.4.51 (~$0.066)/kWh for solar PV projects starting April 1, 2017, 31 percent lower than the current benchmark tariff of Rs.6.51 (~$0.097)/kWh, which was set in 2015.

The KERC has also proposed reducing the control period by a year to March 31, 2018. The new proposal is open for comments and suggestions until March 13, 2017. Based on the new tariff, the assumed capital cost of utility-scale solar PV project in Karnataka is at Rs.46.38 million (~$694,470)/MW.

The recent record low winning bid of Rs.3.30 (~$0.049)/kWh at the REWA Solar Park has pushed states to revise their benchmark tariffs to reflect the decline in project costs. Tamil Nadu recently proposed a new benchmark tariff of Rs.4.41 (~$0.066)/kWh for FY 2017-18, similar to what Karnataka is proposing.

In January 2017, the government of Karnataka announced amendments to the State Solar Policy 2014-2021. The estimated solar energy potential of the state has been updated from 20 GW to 24.7 GW and the targeted solar capacity has been increased to 6,000 MW by March of 2021, which is 4,000 MW more than the previous target. The change in the target has been made to reflect the new tariff policy and targets established for the state by the Ministry of New and Renewable Energy (MNRE). Out of the targeted 6,000 MW, 40 percent (2,400 MW) is designated for rooftop solar installations.

The solar power generation in the state will be limited to 200 MW per taluk from all sources of power other than rooftop solar, to avoid grid congestion. According to Mercom’s India Solar Project Tracker, Karnataka has installed over 590 MW in large-scale solar as of February 2016. The state has one of the largest project pipelines in the country with approximately 3 GW.