Karnataka Government Asks KERC to Remove Tariff Ceiling for Renewable Energy Bids

The Karnataka government has written to the State Electricity Regulatory Commission (KERC) to request the removal of the ceiling on tariffs discovered through competitive bidding for renewable energy projects awarded under state bids.

Gaurav Gupta, Additional Chief Secretary of the Energy Department, disclosed the development during a panel discussion at the Bharat Renewable Energy Summit (BRE Summit) 2026 in New Delhi. The announcement came in response to an issue raised by U B Reddy, Vice-Chairman of the Indian Wind Power Association, regarding tariff caps.

Gupta noted that such a ceiling acts as a dampener for investors, adding that the state has also issued an advisory stating that no ceiling should be imposed on tariffs for state-led bids.

Industry sources indicate that this tariff cap has been a longstanding concern for renewable energy developers. KERC initially set the ceiling at ₹3.10 per kWh, which was later raised to ₹3.60 per kWh following industry protests. Renewable energy developers argue that predetermined tariff caps can constrain the bidding process and prevent prices from reflecting prevailing costs and market conditions.

The push to remove bidding obstacles supports Karnataka's broader capacity expansion plans. According to Gupta, the state aims to add 5 to 6 GW of renewable energy annually through 2030, totaling approximately 30 GW over the next five years and 41 GW over the next decade, building upon its existing 28 GW capacity. The 30 GW estimate is based on the announced roadmaps of investors, and the state expects to attract ₹3 lakh crore in investments during this period.

Divya Prabhu, Managing Director of the Karnataka Renewable Energy Development Corporation Ltd (KREDL), also spoke at the conference and outlined upcoming initiatives. She announced that the state will soon release a 600 MW tender for firm and dispatchable renewable energy (FDRE).

Prabhu further detailed plans for a second solar park at Ryapte, following the 2 GW Pavgada park. The Ryapte project is planned with a capacity of 2 GW of solar power and 1 GW of battery storage. Highlighting the state's leased land scheme for renewable energy projects, Prabhu stated that landowners have voluntarily offered 8,000 acres for the Ryapte park.

"Removing tariff ceilings in renewable energy bidding is a positive step toward aligning state policies with market realities. When regulatory caps do not reflect actual costs, investor confidence tends to dip. By addressing this long-standing industry concern and clearing the path for market-driven pricing, Karnataka is strengthening its position as an attractive destination for large-scale infrastructure investments. Such regulatory clarity is essential to achieving ambitious capacity targets and drawing long-term private capital into the green energy sector." — Dr. Shishir Gupta, Founder & CEO, StartupLanes