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Karnataka Solar PV Policy- 2013- Key Order Points

This article shows the key takeaway points from the KERC Order dated 10th October 2013.

"Determination of Tariff for grid-interactive solar power plants including rooftop and small solar Photovoltaic power plants"

Previous Order- 13th July 2010 - 31st March 2013.

Scope- PPA's signed on or after 1st April 2013

Determination of the key parameters-

a. Life of the Plant-

25 years

b. Term of Tariff Design-

Levelised single part tariff for 25 years.

c. Capacity Utilization factor-

19% for Solar PV Plants

d. Capital Cost-

e. Debt-Equity Ratio-


f. Tenure of Debt-

Loan Repayment Tenure of 10 years.

g. Interest on Term Loan-

12.3% for Solar PV Plants

12.5% for Solar Rooftop PV and small solar plants

h. Operations and Maintenance expense

O & M expenses of 1.5% of the capital cost for Solar PV plants, 2.0% of the capital cost for solar rooftop PV. Annual escalation of 5.72% in all cases.

i. Working Capital

Two month’s receivables for determining working capital requirement for solar PV plants and solar rooftop PV plants.

j. Interest on Working capital

13% towards interest on working capital for solar PV and solar rooftop PV plants.

k. Return on Equity (RoE):

16% Return on Equity. The Commission decided to allow the actual tax paid annually as a pass-through without factoring in the same for tariff computations. Thus, the tax paid will be claimed by the generators directly from the procurer (Distribution Licensees).


7% for the first ten years. 1.33% for the next 13 years.

m. Discount Factor

Discount factor of 13.41% for determination of levelised tariff for 25 years.

n. Auxiliary consumption

Auxiliary consumption of 0.25% of the generation for Solar PV Plants and no auxiliary consumption for Rooftop solar PV Plants.

o. Other issues

(i) Sharing of Clean Development Mechanism (CDM) benefits-

a) 100% of gross proceeds on account of CDM benefit are to be retained by the project developer in the first year, after the date of commercial operation.

b) In the second year, the share of beneficiaries shall be 10%, which shall be progressively increased by 10% every year till it reaches 50%, whereafter, the proceeds shall be shared in equal proportion by the generating companies and the beneficiaries.

(ii) Grid Connectivity:

STU shall arrange necessary facilities to evacuate power from the interconnection point. Further, STU/ESCOMs shall not collect any network augmentation charges towards system augmentation beyond the interconnection point. The developer shall be responsible for providing evacuation facility upto the interconnection point.

In the case of solar rooftop PV of kilowatt scale, the evacuation from 1 kW upto 5 kW installed capacity of solar rooftop PV shall be at single phase 230 volts, the evacuation from 5 kW upto 50 kW installed capacity shall be at 3 phase 415 volts level. Further, solar rooftop PV systems with installed capacity of 50 kW and above shall be connected at 11 kV distribution system. The maximum installed capacity of solar rooftop PV plant at any single location shall be limited upto 1 MW, for the purpose of applying the solar rooftop PV tariff.

(iii) Metering:

Metering shall be in compliance with the CEA (Installation and Operation of Meters) Regulations 2006 as amended from time to time.

In the case of solar rooftop PV systems connected to LT grid of a distribution company, the concept of net metering shall be adopted and the net energy pumped into the grid shall be billed.

(iv) Applicability of Merit Order dispatch:

All grid connected solar power plants inclusive of Kw scale rooftop plants and small solar plants shall be considered as ‘Must Run’ and shall not be subjected to Merit Order Dispatch principles.

(v) Applicability of Wheeling and Banking Charges and Cross Subsidy Surcharge :

Considering the high cost of generation of Solar power and to enable Solar power generators to sell the electricity generated in the market, the Commission decides not to levy any Wheeling and Banking charges, or Cross-Subsidy Surcharge on the Solar generators who sell electricity on open access within the State.

(vi) Control Period:

Commission decides to adopt a control period of five years beginning from 01.04.2013 upto 31.03.2018.

4. Abstract of cost parameters approved by the Commission:

5. Tariff

Tariff Applicability-

01.04.2013 - 31.03.2018

Signed On-

10 October 2013