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Karnataka Solar PV Policy- 2016- Key Order Points

This article shows the key takeaway points from the KERC Order dated 2nd May 2016.

"Determination of tariff and other norms for Solar Rooftop and Small Photovoltaic Power Plants."

Previous Order- 1st April 2013 - 31st March 2018.

This is a Mid-Course Revision Order.

Scope- PPA's signed on or after 2nd May 2016

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 Rooftop and Small Solar PV plants.

d. Capital Cost-

e. Debt-Equity Ratio-


f. Tenure of Debt-

Loan Repayment Tenure of 12 years.

g. Interest on Term Loan-

12% for Solar Rooftop PV and small solar plants

h. Operations and Maintenance expense

O & M expenses equivalent to 1% of the capital cost for solar rooftop and small solar PV plants for FY 2016-17 with an annual escalation of 5.72%

i. Working Capital

The Commission, therefore, decides to allow one month’s receivables as working capital which would be sufficient for sustaining the operational performance of the generator.

j. Interest on Working capital

12.5% 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).


5.83% for the first ten years. 1.54% for the next 13 years.

m. Discount Factor

Discount factor of 13.20% for determination of levelised tariff for 25 years.

o. Other issues

(a) Gross metering, Net metering, and Sanction Load:

Gross Metering

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

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.

(c) Grid Connectivity:

Metering shall be in compliance with the CEA (Technical Standards for Connectivity to the Grid) Regulations 2007, CEA (Technical Standards for Connectivity of the Distributed Generation Resources) Regulations 2012, and any other related Regulations to be notified by CEA and KERC Grid Code as amended from time to time.

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

The Wheeling, Banking, and Cross Subsidy surcharge shall be applicable as per Commission’s Order dated 18th August 2014.

(e) Third-party Investments:

The Commission considers that, in view of the limited financing capacity of domestic consumers, third party investment in this category needs to be encouraged. The ESCOMs shall permit the domestic consumers to install SRTPV with third party investment.

4. Abstract of cost parameters approved by the Commission:

5. Tariff

Tariff Applicability-

02.05.2016- 31.03.2018

Signed On-

2 May 2016