KERC Mulls Setting Generic Rooftop Solar Tariff Under RESCO model

The Karnataka Electricity Regulatory Commission (KERC) has published a discussion paper with regards to tariff determination and other norms for rooftop solar energy projects and has invited comments from all stakeholders.

The discussion paper notes that the commission has set a levelized tariff of ₹3.56 (~$0.052)/kWh for all rooftop solar PV projects for 25 years in its May 18, 2018 order. The tariff for rooftop solar PV projects up to 10 kW for domestic consumers was revised to ₹4.15 (~$0.06)/kWh in its December 19, 2018 order.

The generic tariff determined by the commission is only applicable for rooftop solar PV projects which are owned and operated by consumers and installed by their own funds (CAPEX model).

The generic tariff does not address the installation of a rooftop solar project by third-party on consumer premises (RESCO model), where investors own the project. The commission feels that the absence of a fixed generic tariff for such rooftop projects may have stunted the growth of capacity addition and investment.

The Commission intends to encourage third-party investment in rooftop solar projects on consumer rooftops. Under the program, third-party investor/developer will be able to install and operate the project for a mutually agreed period and sell the power at a predetermined tariff to the owner of the rooftop.

The last date to give suggestion/comments is March 15, 2019.

The commission would also allow the registered consumers to sell the surplus energy to DISCOMs at a separate generic tariff; however, it has not determined the tariff for such projects yet.

The paper also lists out other business models such as consumer-centric and utility-centric business models to spur investment in the rooftop segment.

It notes the capital cost of installing such projects would be lower in comparison to the capital cost of residential rooftop project due to the economies of scale.

The sale of electricity by the owner of rooftop projects would also amount to supply of energy under open access, and possibly making such supply liable for cross-subsidy surcharge and addition surcharge as applicable.

At this point, the commission feels that a broader consultation with all stakeholders is necessary. Here are some other issues listed for the discussion –

  • The parameters to be adopted to determine the tariff under such models
  • Tenure of the power purchase agreement to be executed between consumers/RESCO and DISCOMs
  • Payment of cross-subsidy surcharge and additional surcharge
  • The responsibility of the equipment safety
  • Any other modification/change in operational procedure

The Karnataka government has set a target of 2,400 MW of rooftop solar projects to be installed by March 2021 under its solar policy 2014-2021.

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.

Recently, Mercom reported that KERC issued a discussion paper to set tariff for solar power projects, including solar rooftop projects for the financial year 2020.