Karnataka Solar Policy – 350 MW to be installed

Posted on July 12, 2011 by

Karnataka recently released its new solar policy, targeting capacity addition in solar power projects by 350 megawatts by  2016. The composition of this number is as under

  • 200 MW solar will be developed for sale to distribution utilities. The allotment is expected to happen at the rate of 40 MW every year until 2016. For developers, this is a key factor providing certainty on the allotment timelines. The policy as of yet has not spelt out the composition in terms of photovoltaic and concentrated solar power (CSP).
  • 50 MW worth of bundled solar thermal power will be allotted to state -owned utilities for development. Utilities are expected to mix thermal power sourced from outside the state with solar power they generate in Karnataka.This 50 MW capacity will be developed with a key role to National Thermal Power Corporation (NTPC), as the bundling with thermal power is involved.
  • 100 MW will include projects under the Renewable Energy Certificate (REC) mechanism. These projects will sell power to the grid at the average power purchase cost (APPC) of the concerned utility and will gain solar RECs.

Renewable Purchase Obligation

Karnataka released its Renewable Purchase Obligation (RPOs) order in March 2011 and recently proposed a few amendments to it. Under the RPO order, the electricity supply companies such as BESCOM, MESCOM, HESCOM, GESCOM and the captive/open access consumers in the state have to source 0.25% of their total energy consumption from solar. Buying RECs to meet this obligation is another option. Karnataka believes that the RECs from the 100MW capacity will have demand from these RPO obligations.

Policy DetailsKarnataka solar policy

The solar PV projects that plan to sell their electricity to state utilities at preferential tariff have to have a capacity of between three and 10 MW. The concentrated solar power (CSP) projects have to have a minimum size of five MW. There is no upper limit on size. Karnataka is not exactly one of the sunniest state in the country and thus the sizes have been kept smaller (as compared to states such as Rajasthan).

KREDL (Karnataka Renewable Energy Development Ltd), is the nodal agency for implementation of solar projects in Karnataka. It will allott the projects for sale of power to the utilities at the preferential tariff through competitive bidding. KREDL will soon come up with the Request for Selection (RfS) document that will guide the developers to submit their proposals.

The competitive bidding will start backwards from the maximum tariff set by Karnataka Electricity Regulatory Commission (KERC) in July 2010. For the projects to be commissioned before 31 March 2013, the levelized tariff for a 25 year PPA with the utilities is 14.50 rupees per unit for Solar PV and 11.35 rupees per unit for CSP.

The policy also targets building solar capacity for captive users and the merchant power projects that sell solar power directly to third party buyers through open access. The policy has opend this avenue to help users fulfill their RPOs and to also bring more investment into solar market of the state.

To keep the costs lowers, policy allows developers to inject power at 11kV and above. The National Solar Mission requires injection at 33kV and above. This is also expected to lead to lower prices in the competitive bidding process.

Together with the National Solar Mission, the Karnataka solar policyis expectec to reach a combined target of 126 MW of solar power 2013-14.

Know your RPO here