Karnataka Solar Policy Amended – Bid Security Amount for Group Captive Projects Raised

The Karnataka State Solar Policy 2014-21 has been amended for the third time and addresses three important points – the size limitation of private solar parks, the performance guarantee for group captive projects, and the project completion time for captive, group captive and independent power producers (IPPs) for third-party sale.

The amended policy which will come into immediate effect states that for the promotion of integrated solar parks, the capacity will now be limited to a maximum of 100 MW at a single location compared to the earlier guidelines which stated that the minimum capacity for the private solar park was 25 MW. However, it will be subjected to the overall limit of 200 MW/ taluk and will not include those projects which are implemented on the solar rooftops.

Although the fee remains the same for the competitive bidding process, bundled power, and rooftop projects, the government has made certain amendments under the categories of captive, group captive, and IPPs for third-party sale.

The recent notification says that the captive, group captive, and IPP projects for third-party sale will have a uniform facilitation fee of ₹25,000 (~$352.96)/MW.



However, for the captive and group captive projects, the bid security amount has been increased to ₹500,000 (~$7,059)/MW from the earlier ₹300,000 (~$4,235)/MW.

A net worth of 30% of the capital cost determined by the Karnataka Electricity Regulation Commission (KERC) from time to time is mandated for the captive and group captive, which was not necessary earlier.

In the previous amendment of the Karnataka State Solar Policy 2014-21, it was regulated that for solar projects of captive, group captive and IPP for third-party sale, a transfer fee of ₹150,000 (~$2,198)/MW and a yearly extension fee will be charged starting at ₹100,000 (~$1,465)/MW for the first year of extension.

KREDL - Amended Fees and Charges Applicable for Various Categories of the Utility Scale & Rooftop Solar

As per the ealier policy for solar parks, the bidder should have a net worth of ₹20 million (~$0.28 million), but this has now been amended. The modified policy states that the bidder should have a net worth of 30% of the cost mentioned in the detailed project report (DPR). A bid security amount of ₹500,000 (~$7,059)/MW has to provided according to the amendment; this was earlier nil.

Private solar parks are given 18 months for completion, and solar projects in these solar parks are given 12 months to be commissioned from the date of completion of solar parks. So, the overall time allowed for the commissioning of solar projects in a private solar park is 30 months from the date of allotment of the solar park.

“If the developer fails to commission the solar projects in private solar park in 30 months from the date of allotment, the allotment will be canceled automatically. If the capacity in the solar park is developed partially in the overall time of 30 months from the date of allotment, the allotted capacity will be restricted to the commissioned capacity and the remaining capacity will be treated as canceled”, states the notification.

Clarifying that the commissioning timeline is 30 months instead of 18 months is good for the industry, while increasing the bid guarantee amount may make it onerous for IPPs. As most states have made it extremely difficult to procure solar energy through open access, group captive has become a more attractive model.

In August 2019, the Ministry of New and Renewable Energy (MNRE) also issued new guidelines incorporating changes in the project timelines for the development of solar parks in the county.

According to central government estimates, Karnataka has emerged as the best state in India for rooftop solar projects. Last year, Mercom had published a research report that gave Karnataka the top spot among all states pursuing the expansion of large-scale solar projects.

Image credit: Speed Solar