The Karnataka Electricity Regulatory Commission (KERC) has proposed a tariff of ₹2.3 (~$0.026)/kWh for rooftop solar projects under PM Surya Ghar: Muft Bijli Yojana with a maximum capacity of 2 kW, ₹2.48 (~$0.028)/KWh for projects between 2 kW and 3 kW, and ₹2.93 (~$0.033)/kWh for projects above 3 kW.

The Commission has also invited stakeholders’ comments on the proposed tariff by April 15, 2025.

In earlier guidelines for rooftop solar power projects under the PM Surya Ghar program, KERC had proposed a tariff of 2.25 (~$0.026)/kWh for projects of up to 2 kW capacity, ₹2.43 (~$0.028)/kWh for projects between 2 kW and 3 kW, and ₹2.62 (~$0.03)/kWh for projects above 3 kW.

The Commission also proposed a tariff ₹3.47 (~$0.04)/kWh for rooftop solar projects (without subsidy) of up to 10 kW capacity and ₹3.08 (~$0.035)/kWh for projects above 10 kW.

The Karnataka regulator also proposed guidelines for virtual and group net metering.

In December 2024, KERC issued an order to simplify the adoption of rooftop solar systems for consumers with sanctioned loads of up to 10 kW.

The Commission proposed a tariff of ₹2.92 (~$0.033)/kWh for ground-mounted solar power projects.

The proposed tariff has dropped from the earlier amount of ₹3.04 (~$0.035)/kWh for MW-scale solar projects. It also included ₹3.79/kWh for power projects up to 10 kW and ₹3.2 (~$0.037)/kWh for projects above 10 kW.

The decision was taken after considering the following parameters:

• The useful life of the installation was proposed at 25 years
• The capacity utilization factor was proposed at 19%
• The debt-equity ratio and genetic tariff determination have been proposed at 70:30 for all solar power projects
• The capital cost for rooftop solar power projects up to 10 kW has been proposed at ₹35,000 (~$405.36)/kW
• The capital cost for rooftop solar power projects above 10 kW has been proposed at ₹30,000 (~$347.45)/kW
• The capital cost for ground-mounted solar projects has been proposed at ₹30.05 million (~$0.35)/MW
• The operation and maintenance expenses have been estimated at ₹791.314 (~$9.16)/kW for rooftop solar power projects and ₹594,500 (~$6,885.32)/MW for ground-mounted solar power projects. It will also include an annual escalation of 5.72%
• The Commission has proposed an 11.10% per annum interest rate for 13 years of tenure for project loans
• The interest rate on working capital has been proposed at 11.50% per annum. It will be based on one month’s receivables for rooftop solar projects and two months’ receivables for ground-mounted solar projects
• The Commission has allowed a depreciation rate of 5.38% for rooftop solar projects and 5.667% per annum for ground-mounted solar projects. Depreciation will be permitted on 90% of the capital cost recoverable in the first 13 years and the remaining 10% in the next 12 years
• Return on equity has been proposed at 14% per annum.
• The discount rate has been proposed at 11.97%
• The Commission allowed 0.25% auxiliary consumption for ground-mounted solar power projects and none for rooftop solar power projects
• Virtual and group net metering were introduced into the electricity distribution framework

The Commission also proposed the following guidelines:

Guidelines for Virtual and Group Net Metering

• Consumers of all categories can install solar projects under virtual net metering under capex or third-party investment mode. However, only the same category consumers must join under virtual net metering
• The minimum size must be set at 5 kW, and the maximum up to sanctioned land or contract demand of all participating consumers
• Prosumers may set up solar projects to meet the power requirement of more than one electrical service under the same name and category. The projects must also be located within the same distribution company (DISCOM) supply area
• If the service connection of any participating consumer is disconnected, the unadjusted units will be paid for by the DISCOMs at the end of the financial year
• Consumers must have a smart meter
• If the energy exported exceeds the units consumed by the consumer, the surplus units will be carried forward in the subsequent billing periods
• The DISCOM will purchase unadjusted units of electricity at the end of the financial year at 75% of the genetic tariff. The cumulative quantum of injected electricity carried forwards will be reset to zero at the start of each settlement period
• Electricity consumed within any time block will be compensated within a similar time block
• If the energy injected into the grid exceeds the import of units, the surplus units injected will be carried forward to the next billing cycle as energy credits

Virtual Net Metering Guidelines

• The energy generated from the solar project will be credited per the procurement ratio mentioned in the power purchase agreement
• Consumers can change the energy credit ratio by submitting a new power purchase agreement once every year. They must provide three months’ advance notice for changing the ratio
• Any surplus generation over consumption in any time block will be accounted as surplus energy generated in the off-peak time block

Group Net Metering Guidelines

• Energy generated from the solar project will be credited to the electricity bill of each participating connection per the priority listed in the connectivity agreement with the DISCOM
• The priority list for adjusting the balance surplus energy may be revised once at the start of the financial year with advanced notice of three months.
• Any surplus generation over consumption in any time block will be accounted as surplus energy within off-peak time blocks for the time-of-the-day consumers and normal time blocks for non-time-of-the-day consumers

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