Renewable Energy Tariff Decision: Karnataka Commission Charts Course for Next Decade

In the context of determining tariffs for mini hydro, wind, bagasse-based cogeneration, and biomass-based power plants for the next decade, the regulatory commission of Karnataka, KERC, is delving into the details. These plants have either completed or are nearing the end of their initial 20-year term as per their Power Purchase Agreements (PPAs).

The commission has gathered comprehensive information regarding the existing PPAs for these renewable energy projects from the Electricity Supply Companies (ESCOMs). Factors such as the terms of the PPAs, capacity, energy availability, useful life of the plants, environmental considerations, demand-supply projections, Renewable Purchase Obligation (RPO) compliance by ESCOMs, and the objectives outlined in the Karnataka Renewable Energy Policy 2020-2027 are being carefully analyzed.

Taking into account various inputs, including tariff determinations, generic tariff orders, market trends, and inflation in project capital costs, the commission aims to make informed decisions. Previous rulings by the commission and actions taken by other state regulatory bodies regarding tariff determinations for extended PPA periods are also being considered.

Under the provisions of the Tariff Policy 2016 and the Electricity Act 2003, the commission intends to allow tariffs equivalent to 85% of the tariff at the end of the 20th year of the PPA or the negotiated tariff as per the PPA, whichever is lower. This tariff will be applicable for the next 10 years starting from the 21st year, without any escalation, regardless of additional expenditures incurred by the generators, such as repairs and maintenance.

Renewing the PPAs is contingent upon the power plants meeting safety and performance standards mandated by relevant authorities. All ESCOMs have been instructed to initiate the renewal process for PPAs pertaining to mini hydro, wind, bagasse-based cogeneration, and biomass-based power plants that have either completed or are reaching the end of their initial 20-year term. These renewal agreements must adhere to the specified terms and conditions and be submitted to the commission for approval.

This decision by the regulatory commission underscores the importance of sustaining and incentivizing renewable energy projects in Karnataka, aligning with the state’s broader renewable energy goals and commitments.

Please view the document here for more details.