Karnataka Introduces Virtual Net Metering in Big Solar Policy Overhaul

In a major policy shift aimed at expanding rooftop solar adoption, Karnataka has officially introduced Virtual Net Metering (VNM) and Group Net Metering (GNM) for the first time, allowing greater flexibility for consumers to utilise distributed solar power across multiple locations.

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The landmark decision, announced by the Karnataka Electricity Regulatory Commission (KERC) in a new tariff order effective July 1, 2025, to June 30, 2026, is expected to significantly boost demand for solar systems among residential users, institutions, and government bodies across the state.

Enabling Shared Solar Power

Virtual Net Metering will allow consumers to install a solar plant at one location and distribute the generated energy across multiple electricity service connections, provided they fall under the same category and are located within the same distribution licensee's area. Eligible consumer categories include domestic households, group housing societies, charitable institutions, and government buildings. Plant sizes must range from 5 kW to the combined sanctioned load of all beneficiary accounts.

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Group Net Metering, meanwhile, permits a single consumer to offset surplus solar generation across their own service connections, even if they are at different premises. This too applies within the same licensee area and across all consumer categories, with a minimum plant size of 5 kW and a requirement that the host connection consumes at least 20% of monthly output.

Excess power under both models will be purchased by distribution companies at 75% of the applicable generic tariff, and consumers must install smart meters at their own cost. Notably, Open Access charges are waived for such systems if generation and consumption occur on the same 11kV feeder or distribution transformer.

Broader Reforms to Rooftop and Distributed Solar

The new order also renames "Solar Rooftop PV (SRTPV)" plants as "Distributed Solar PV (DSPV)", to better represent installations beyond conventional rooftops. These now include elevated ground-mounted structures and building facades, subject to safety and municipal regulations.

In a bid to simplify solar adoption:

• LT domestic consumers up to 150 kW are no longer required to sign Power Purchase Agreements (PPAs); conditions will be integrated into the online application form.
  
  

• Open Access consumers are now eligible for net metering, but will not receive compensation for surplus injection.
  
  

• DSPV plants can be relocated within the same distribution area without voiding the PPA, provided the new location does not exceed the original sanctioned load.
  
  

No Mandatory Battery Storage

Contrary to Central Electricity Authority (CEA) recommendations, the Commission has not mandated battery energy storage systems (BESS) for net-metered DSPV plants, citing high costs and potential slowdown in adoption.

Revised Tariffs for FY 2025–26

KERC has also issued revised tariffs for new projects:

• Ground-mounted solar: Rs 3.07/kWh (benchmark cost: Rs 321.53 lakh/MW).
  
  

• DSPV (net/gross metering, above 10 kW): Rs 3.08/kWh (capital cost: Rs 30,000/kW).
  
  

• Domestic DSPV (1–10 kW): Rs 3.86/kWh (capital cost: Rs 40,000/kW).
  
  

• Under PM Surya Ghar Muft Bijli Yojana (with subsidy):
  
  

• Rs 2.30/kWh (1–2 kW)
  
  

• Rs 2.48/kWh (2–3 kW)
  
  

• Rs 2.93/kWh (above 3 kW)
  
  

The Commission retained a 25-year plant life, 19% capacity utilisation factor (CUF), and 14% return on equity.