KERC Recommends Halting New Solar Tenders, Auctions in Karnataka

Karnataka which is India’s top state in terms of installed solar capacity has stopped the building of new solar energy projects.

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The Karnataka Electricity Regulatory Commission (KERC) has written to the Karnataka Renewable Energy Development Limited (KREDL) regarding the procurement of solar power.

According to the letter dated 7 March, the KERC reportedly has noted that the power availability in Karnataka from all sources combined is more than the demand.

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Due to this, the distribution companies (DISCOMs) will have to curtail the procurement from thermal power sources to accommodate renewable energy.

This curtailment will lead to extra cost as the fixed tariff must be paid to thermal projects regardless.

The commission, in the letter, observed that the DISCOMs in Karnataka have been contracted to procure enough solar PV power to meet their renewable purchase obligation (RPO) for the next two financial years after FY 2019-20. The commission also noted that at present, many DISCOMs are defaulting on payments towards power supply by renewable energy generators due to cash flow constraints.

Stating this, the KERC advised KREDL not to initiate any bidding process for solar PV. This new development also shows the increasing gap between renewable energy potential rich states in India and the others. This is a concerning development but not unexpected.

Last December KREDL floated a tender for developing 50 MW of grid-connected solar project at Pavagada Solar Park in Karnataka after which the tendering activity has slowed down.

Karnataka, with 2,800 MW of solar projects in the development pipeline, is known for housing the one of the world’s largest solar park in Pavagada located in the Tumkur district. The mega project is expected to house solar projects with about 2,000-MW capacity at an investment of Rs 14,800 crore. Of this, over 600 MW has already been commissioned. The state has a total installed renewable energy generation capacity of 13,577 MW.