The Karnataka Electricity Regulatory Commission (KERC) has issued a discussion paper to set tariff for solar power projects, including solar rooftop projects for the financial year 2020.

Earlier, Mercom reported that KERC has fixed 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 are applicable until March 31, 2019.

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.

However, the commission feels that the growth in the rooftop solar sector is not encouraging as only 154 MW of rooftop solar has been installed and commissioned. Moreover, most of these installations are of larger capacity and despite a huge potential in the domestic consumer segment, the interest from the smaller consumers have not been very enthusiastic.

The commission considers that the reason for such a lackluster interest in rooftop solar by domestic consumers is because of low feed-in tariff (FiT) fixed by the commission, given the relatively higher cost of smaller solar rooftop systems. As a possible solution, the commission has revised the tariff in a December 19, 2018 order and set the generic tariff for grid-connected solar rooftop units between 1 kW and 10 kW without capital subsidy at ₹4.15 (~$0.06)/kWh, and with capital subsidy at ₹3.08 (~0.044)/kWh.

The tariff policy published in 2016 said that all the future procurement of renewable energy (except waste to energy) would be through the competitive bidding process. The discussion paper confirms that this method would continue in the future.

Here are some other points from the discussion paper-

• The life of plant needs to be 25 years as PV modules have a warrantee of 25 years
• The commission to adopt levelized tariff for 25 years
• The commission will continue to consider the reduction of 0.5 percent of net generation as annual degradation from the fifth year onwards for MW scale projects
• The capacity utilization factor will continue to be 19 percent
• The commission would also continue with operations and maintenance (O&M) rate of ₹600 (~$8.42)/kW for solar rooftop and ₹450,000 (~$6314)/MW for ground mounted mega scale solar projects
• The commission proposes the tenure of debt as 13 years and allow 10 percent interest on debt
• The commission has also to allow 2 MW as the maximum installed capacity for rooftop solar projects as against the existing 1 MW.

The commission, in its tariff orders dated May 18, 2018 and December 19, 2018 had considered the capital cost of rooftop solar projects with capacity ranging 1kW to 10 kW (domestic consumers) at ₹48,000 (~$673.46 )/kW and for capacity of 1 kW to 1,000 kW at ₹40,000 (~$561.22)/kW. This is proposed to be revised to ₹45,000 (~$631.37)/kW for 1kW to 10 kW and ₹30,000 (~$420.91)/kW for 1 kW to 2,000 kW installations.

For large-scale projects, the capital cost considered in May 18, 2018 order was ₹35 million (~$0.49)/MW which is proposed to be revised to ₹31.4 million (~$0.44)/MW.

The generic tariff will be effective from April 1, 2019 to March 31, 2020.

Nitin is a staff reporter at Mercomindia.com and writes on renewable energy and related sectors. Prior to Mercom, Nitin has worked for CNN IBN, India News, Agricultural Spectrum and Bureaucracy Today. He received his bachelor’s degree in Journalism & Communication from Manipal Institute of Communication at Manipal University and Master’s degree in International Relations from Jindal School of International Affairs. More articles from Nitin Kabeer