Karnataka Finalizes New Solar Tariffs And Reforms For FY26 To Boost Distributed Generation

The Karnataka Electricity Regulatory Commission has issued an order on July 9, 2025, for determining tariffs and norms for solar power projects in the state for the period from July 1, 2025, to June 30, 2026. The order covers grid-connected ground-mounted and distributed solar photovoltaic projects, including rooftop systems. The decision follows the release of a discussion paper on March 18, 2025, and a public hearing held on June 6, 2025, where various stakeholders submitted comments and suggestions.

The Commission approved benchmark tariffs of ₹3.07 per unit for megawatt-scale ground-mounted solar projects and ₹3.08 per unit for distributed solar PV systems from 1 kW up to sanctioned load for non-domestic consumers. For domestic consumers with 1 kW to 10 kW capacity, the tariff is ₹3.86 per unit without capital subsidy. Under the PM Surya Ghar Muft Bijli Yojana, the tariffs are ₹2.30 for 1–2 kW, ₹2.48 for 2–3 kW, and ₹2.93 for above 3 kW with subsidy. These tariffs apply to new projects commissioned between July 1, 2025, and June 30, 2026.

The Commission introduced significant reforms such as renaming “Solar Rooftop PV Plants” to “Distributed Solar PV Plants” and expanding the eligible installation sites to include rooftops, elevated ground structures, and building facades. Virtual Net Metering (VNM) and Group Net Metering (GNM) were allowed, enabling multiple consumers or multiple connections of the same consumer to share solar generation benefits.

For domestic consumers up to 150 kW, the requirement to sign a power purchase agreement (PPA) has been eliminated, and terms are now included in the online application process. Timelines have been set for applications, inspections, and commissioning, with penalties imposed on distribution licensees for delays.

The Commission also decided not to mandate battery storage with distributed solar PV under net metering, citing cost concerns. Open access consumers are now permitted to adopt net or gross metering or set up captive plants. Shifting of existing solar installations within the same licensee’s jurisdiction is allowed without changing PPA terms.

The Commission retained key financial parameters such as a 25-year project life, 70:30 debt-equity ratio, 19% capacity utilization factor, and 11.10% interest on debt. Capital costs were fixed at ₹40,000 per kW for domestic DSPV, ₹30,000 per kW for others, and ₹321.53 lakh per MW for ground-mounted projects. Operation and maintenance costs were set at ₹791.31 per kW for DSPV and ₹5.945 lakh per MW for ground-mounted plants, with 5.72% annual escalation.

The final order includes rules on metering, grid connectivity, energy accounting, and multiple installations. Consumers are allowed to install certified solar equipment without being restricted to empanelled vendors. The order was signed by the Chairman and Members of the Commission and comes into effect immediately.