KERC Clarifies PPA Rules For Distributed Solar Consumers Amid Contracted Load Changes In Karnataka

The Karnataka Electricity Regulatory Commission has issued an important order to remove confusion around Distributed Solar PV installations and the validity of existing Power Purchase Agreements. The order, dated December 19, 2025, addresses long-standing concerns raised by solar power consumers and other stakeholders about how changes in contracted load were being handled by Electricity Supply Companies in the state.

Over the past few years, several consumers with rooftop and distributed solar systems had complained that ESCOMs were imposing restrictive conditions when they tried to modify their electricity demand. In many cases, consumers wanted to reduce their contracted demand to align it with the capacity of their installed solar plant. In other cases, consumers sought to increase their sanctioned load without making any changes to their existing solar setup. According to the complaints, ESCOMs were insisting that such consumers sign fresh PPAs.

These new PPAs often came with less favourable terms. The tariff offered under the revised agreements was reportedly reduced to either 90% of the original tariff or the prevailing tariff at the time, whichever was lower. Consumers argued that this practice was unfair, as they were not increasing their solar generation capacity and were only adjusting their electricity usage or sanctioned load.

The Commission examined these grievances in detail. The bench, headed by Chairman P. Ravi Kumar along with members H.K. Jagadeesh and Jawaid Akhtar, referred to an earlier Commission order issued in 2017. That order clearly stated that a reduction in tariff is applicable only when there is an actual increase in the capacity of the solar power plant. The Commission observed that changes in contracted demand or sanctioned load do not automatically imply an increase in solar generation capacity.

Based on this interpretation, the Commission clarified that reducing contracted demand up to the level of the installed solar capacity does not require execution of a new PPA. Similarly, increasing the sanctioned load without adding additional solar panels or increasing solar capacity also does not call for a fresh agreement. In both situations, the existing PPA will continue to remain valid.

The Commission further ruled that the original tariff and the original tenure of the PPA must remain unchanged in such cases. This means that ESCOMs cannot force consumers to accept lower tariffs simply because they are managing their electricity demand more efficiently.

This decision is expected to provide significant relief to solar prosumers across Karnataka. By protecting existing tariffs and contract terms, the order brings greater clarity and financial certainty to consumers who have invested in distributed solar systems and wish to optimise their energy use without fear of penalty.