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Karnataka Proposes INR 3.24/kWh Tariff Ceiling for Wind Projects Through FY 2029
Mar 25, 2026
The Karnataka Electricity Regulatory Commission (KERC) has released a discussion paper proposing a ceiling tariff of Rs3.24/kWh for wind power projects, applicable from FY 2026-27 to FY 2028-29. The proposed rate is slightly lower than the current cap of Rs3.34/kWh, which remains valid until March 31, 2026.
The Commission has invited stakeholders to submit their feedback on the proposal by April 9, 2026. As per the existing regulatory framework, wind power procurement in the state is carried out through a competitive e-reverse bidding process, with discovered tariffs required to remain within the ceiling set by the Commission and aligned with central guidelines.
In formulating the proposed tariff, KERC has considered global studies indicating declining capital costs, reduced operations and maintenance expenses, and improved performance metrics for wind projects. It also analyzed data from 52 projects in Karnataka, totaling around 492 MW, commissioned over the past three years.
Based on this data, the Commission has proposed key normative parameters, including a capital cost of Rs65 million per MW and a capacity utilization factor (CUF) of 33%. Operations and maintenance expenses are estimated at Rs1 million per MW for the base year, with a 5% annual escalation.
Financial assumptions in the proposal include a debt-equity ratio of 70:30, a return on equity of 14%, and a loan tenure of 15 years. Interest rates on term loans and working capital have been proposed at 9.5% and 11%, respectively, along with a structured depreciation framework.
Additional provisions include auxiliary consumption of 0.5% of total generation, while income tax components are to be treated as pass-through costs. Based on these parameters, the Commission has calculated a levelized tariff of Rs3.24/kWh.
The proposed ceiling tariff will apply to future bidding rounds during the specified period and may also be used for payments related to banked energy procured by distribution companies.