Karnataka Government seeks removal of tariff ceiling for renewable energy bids

The Karnataka government has written to the Karnataka Electricity Regulatory Commission (KERC) requesting the removal of the tariff ceiling on renewable energy projects determined through competitive bidding conducted by the state. This information was provided by Gaurav Gupta, Additional Chief Secretary of the Energy Department.

Gaurav Gupta made this disclosure during a panel discussion at the 'Bharat Renewable Energy Summit (BRE Summit) 2026' held in New Delhi. When U.B. Reddy, Vice-Chairman of the Indian Wind Power Association, began discussing the issue of tariff ceilings, Gupta interrupted to state, "Before further discussion on this matter, I would like to inform you that we have written to the ERC to remove the ceiling."

Gaurav Gupta observed that such a limit on tariffs could prove to be a "dampener" for investors. He further stated that the state government has also issued an advisory clarifying that no tariff ceiling should be imposed on bids issued by the state.

According to a BusinessLine report, industry sources stated that this issue has long been a matter of concern for renewable energy developers, who had been consistently pressing for the removal of this limit. KERC had initially set the tariff limit at ₹3.10 per kWh. However, following protests from the industry, this limit was increased to ₹3.60 per kWh.

The industry believes that there should be no pre-determined ceiling on tariffs decided through competitive bidding, and prices should be determined by market forces. Their argument is that a tariff cap can limit the bidding process and prevent the reflection of current costs and market conditions in projects.

The Karnataka government has ambitious plans for the development of renewable energy and is therefore keen to remove obstacles in the path of investment. In his opening remarks, Gaurav Gupta stated that the state will add an additional capacity of 5-6 GW every year until 2030. The goal is to add 30 GW in the next five years and 41 GW in the next 10 years to the existing renewable energy capacity of 28 GW.

Gupta emphasised that this estimate of 30 GW is based on the roadmap declared by investors. He added that the state will attract an investment of ₹3 lakh crore over the next five years.

At the conference, Divya Prabhu, Managing Director of Karnataka Renewable Energy Development Corporation Limited (KREDL), stated that the state will soon issue tenders for 600 MW of 'Firm and Dispatchable Renewable Energy (FDRE)'. She further mentioned that the state is planning a second solar park at Ryapte. The first solar park was at Pavagada with a capacity of 2 GW.

The new Ryapte park will have a capacity of 2 GW solar and 1 GW battery storage. Divya Prabhu noted that Karnataka was the first state to provide land on lease for renewable energy projects. This scheme was so attractive that landowners (farmers) have voluntarily offered 8,000 acres of land for the Ryapte park.