The Karnataka Electricity Regulatory Commission (KERC) has issued draft regulations proposing capacity limits, technical specifications, and a broader framework for grid-interactive distributed solar photovoltaic (DSPV) projects in the state.

The Draft Karnataka Electricity Regulatory Commission (Grid Interactive Distributed Solar Photovoltaic Projects) Regulations, 2026, will apply to distribution licensees (DISCOMs) and eligible consumers in Karnataka.

Stakeholders can submit their comments by June 19, 2026.

Scope and Eligibility

The draft regulations define a DSPV project as a solar power generation system of up to 10 MW connected to the distribution network at 33 kV or below, with or without energy storage. The system must have anti-islanding protection to prevent power flow into the grid when the grid supply is unavailable.

Consumers may own the DSPV project or enter into a commercial arrangement with a renewable energy service company. In such cases, the payment agreement will be between the consumer and the company. The DISCOM will enter into an agreement only with the eligible consumer.

Consumers with pending arrears to the DISCOM will not be eligible for DSPV installations. However, consumers involved in billing disputes may install DSPV projects if they deposit the disputed amount with the licensee.

Consumers availing open access may also install DSPV projects at their premises under net metering. In such cases, settlement priority will first be given to open-access transactions, followed by banked energy, if applicable, and then to DSPV generation.

Energy Storage Requirement

Consumers installing DSPV projects above 10 kW under metering mechanisms other than behind-the-meter must install hybrid inverters or battery energy storage systems. The storage capacity must be at least 20% of the project’s energy generation potential.

Metering Mechanisms

Under net metering, only domestic consumers, residential apartments, group housing societies, charitable institutions, government buildings, schools, and buildings of local authorities will be eligible.

The minimum capacity under net metering will be 1 kW. The maximum capacity will be the consumer’s sanctioned load or contract demand, or 500 kW, whichever is lower.

Net billing will be available to all consumer categories. The minimum capacity will be 1 kW, while the maximum capacity will be the sanctioned load or contract demand, or 500 kW, whichever is lower.

Gross metering will also be available to all consumer categories. The minimum capacity will be 1 kW, and the maximum capacity must not exceed the sanctioned load or contract demand.

Group net metering will be open to all consumer categories. The service connections must be in the same name and category.

The minimum capacity will be 5 kW, and the maximum capacity must not exceed the combined sanctioned load or contract demand of all participating service connections.

Virtual net metering will be available only to domestic consumers, residential apartments, group housing societies, charitable institutions, government buildings, schools, and buildings of local authorities.

Participating consumers must belong to the same consumer category. The minimum capacity will be 5 kW, and the maximum capacity must not exceed the combined sanctioned load or contract demand of all participating consumers.

Behind-the-meter systems will be available to all consumer categories. These systems must be installed behind the consumer’s meter for self-consumption and will not be eligible to sell power to the DISCOM.

Energy Accounting

Under net metering, electricity exported to the grid will be adjusted against electricity supplied by the DISCOM. Excess energy will be purchased by the DISCOM at the tariff determined by the Commission and settled monthly.

Under net billing, imported electricity will be valued at the applicable retail tariff, while exported electricity will be valued at the tariff determined by the Commission. The exported energy value will be deducted from the imported energy value to determine the net amount payable or credited.

Under gross metering, the DISCOM will purchase the entire energy generated by the DSPV system at the tariff determined by the Commission. The consumer’s electricity consumption will be billed separately at the applicable retail tariff.

Under group net metering and virtual net metering, surplus energy remaining at the end of each billing cycle will be purchased at 75% of the generic tariff applicable to ground-mounted solar power projects or DSPV projects, as determined by the Commission.

Consumers opting for group net metering and virtual net metering must install smart meters at their own cost.

Behind-the-Meter Systems

Consumers installing behind-the-meter DSPV systems must inform the DISCOM before installation.

If a consumer installs a system without prior intimation, the consumer must inform the DISCOM within three months. Failure to do so will attract a one-time penalty of ₹1,000 (~$10)/kW of installed DSPV capacity, or such amount as determined by the Commission.

Consumers must install reverse-power-flow relays to prevent electricity from being injected into the grid from behind-the-meter systems. Any injection will be treated as an inadvertent injection and will not be paid for or settled by the DISCOM.

Technical Standards and Hosting Capacity

DSPV capacity connected to a distribution feeder or distribution transformer must not exceed the hosting capacity specified under the KERC Distribution Code, KERC Grid Code, Conditions of Supply, or other relevant regulations.

DSPV projects below 150 kW must be connected only to the existing distribution transformer serving the consumer. The total capacity of existing and proposed DSPV projects on that transformer must not exceed 80% of its rated capacity.

DSPV projects above 150 kW must be connected only to the existing 11 kV distribution system. The total capacity on that feeder must not exceed 80% of the rated current-carrying capacity in urban areas and 90% in rural areas.

The participating consumers will bear the cost of the service line and associated network development up to the interconnection point.

Application Process

For net metering, gross metering, and net billing systems ranging from 1 kW to 150 kW, the submission of the online application will be treated as approval to begin work. Power purchase agreements will not be required for low-tension domestic consumers up to 150 kW.

Consumers must upload the work completion report within 150 days of the application date. The DISCOM must inspect and commission the project within 5 working days of receipt of the work completion report.

If the project is not commissioned within five days of the completion of the work report, the concerned officer will be liable to pay a penalty of ₹1,000 (~$10)/day to the applicant until commissioning. Consumers will also be entitled to deemed generation benefits after five days if the project is not commissioned.

For projects above 150 kW and up to 500 kW under net metering or net billing, and up to the sanctioned load under gross metering, the DISCOM must acknowledge the application within three working days and issue approval or rejection within 10 working days from the date of acknowledgment.

The PPA must be executed within five working days from the issuance of the approval letter. Consumers must submit the work completion report within 150 days of the PPA execution date.

Tariff Determination

KERC will periodically determine the generic tariff for solar and DSPV projects.

The draft proposes a 19% capacity utilization factor for solar projects. The tariff will be a single-part tariff based on fixed cost components, including operation and maintenance expenses, depreciation, interest on loan capital, return on equity, and interest on working capital.

The tariff period will be equivalent to the project’s useful life, proposed at 25 years, or such other period as the Commission may determine.

For generic tariff determination, the debt-to-equity ratio will be 70:30, unless the Commission decides otherwise.

Renewable Consumption Obligation

Electricity purchased by DISCOMs from DSPV projects under gross metering, net metering, net billing, virtual net metering, and group net metering will qualify toward their renewable consumption obligation.

If DSPV projects are set up by designated consumers, open-access consumers, or captive users, the entire renewable energy generated will count toward their renewable energy consumption obligation.

For DSPV projects installed by DISCOMs on government buildings using government funds, the entire energy generated will qualify toward the DISCOMs’ renewable consumption obligation.

India added 2.7 GW of rooftop solar capacity in the first quarter (Q1) of 2026, a year-over-year growth of 125.4% from 1.2 GW, according to Mercom India Research’s Q1 2026 India Rooftop Solar Market Report.

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