Karnataka Solar Tariffs 2026-29: Net Metering, BESS Rules

Quick answer

Why this matters for a Karnataka EPC right now

Karnataka is not a marginal solar market. The state had 6,354.74 MW of installed solar capacity under PPA as of 30 April 2026, but KERC's own discussion paper flagged a real imbalance: distributed solar photovoltaic projects, the category most rooftop and commercial EPC work falls into, account for only 920.74 MW of that total. Large-scale ground-mounted projects dominate, and KERC has said directly that participation from smaller and domestic consumers remains low despite significant rooftop potential.

That context matters for reading the new regulations correctly. The changes here, the raised net-metering cap and the dropped storage mandate, both point toward removing friction for larger DSPV projects specifically, not a broad residential push. An EPC quoting a project in the 500 kW to 1 MW range now has a materially different net-metering answer than it would have under the June 2026 draft, and that is worth knowing before a client conversation, not after a design is already built around the old cap.

The regulatory timeline: draft to final

KERC published the draft Grid Interactive Distributed Solar Photovoltaic (DSPV) Plants Regulations, 2026 in the Karnataka Official Gazette on 4 June 2026, replacing the 2016 Solar Rooftop Photovoltaic Regulations. A public hearing followed on 7 July 2026. The draft, as originally circulated, proposed capping net-metering eligibility at 500 kW and mandating integrated battery storage for any DSPV system above 10 kW.

The final regulations were notified in August 2026. Two changes stand out against the draft:

• Net-metering capacity: 500 kW proposed, 1 MW finalised. The cap for Distributed Solar PV systems was doubled in the final order, expanding eligibility for commercial, industrial and institutional consumers with higher demand.
• Storage mandate: proposed, then withdrawn. The draft's requirement for integrated battery storage on any DSPV system exceeding 10 kW does not appear in the final regulations. It has been removed, not modified.

Separately, KERC also ran a parallel process, a discussion paper issued 19 June 2026, proposing the actual tariff and financial norms for the same 1 July 2026 to 30 June 2029 control period. This is a distinct process from the DSPV regulations above: the regulations set the rules for how a project connects and operates, while the tariff order sets what it gets paid or charged. An EPC needs both, not just one.

What the proposed tariff structure actually says

KERC's discussion paper set out a cost-plus tariff structure, built on a capital cost benchmark of ₹306.90 lakh per MW for ground-mounted projects (₹138 lakh for modules, ₹126 lakh for balance-of-system components, ₹36 lakh for land), a 70:30 debt-to-equity ratio, 10.80% interest on debt over a 13-year tenure, and a 14% return on equity.

The resulting proposed tariffs, differentiated by project type and consumer category, not by module sourcing:

The domestic-vs-non-domestic distinction is real and worth building into any client conversation. Under KERC's prior 2025-26 order, non-domestic DSPV consumers were billed differently from domestic ones (₹3.08/kWh vs. ₹3.86/kWh for domestic 1-10 kW systems, excluding subsidy). That same category split, not a DCR/non-DCR split, is what actually drives which rate a given customer receives.

Worth being direct about here: DCR, Domestic Content Requirement, is a national rule administered through MNRE's ALMM List-II framework, applicable to specific central schemes like PM Surya Ghar and PM-KUSUM. It determines module and cell eligibility for those schemes. It is not a Karnataka-specific tariff category, and KERC's tariff structure does not set a different rate based on whether a project used DCR-compliant modules. For what DCR compliance actually requires and which projects it applies to, see our full national guide to what's banned and what's still allowed under ALMM List-II.

What the raised net-metering cap actually unlocks

The gap between 500 kW and 1 MW is not a rounding difference for a mid-sized commercial or industrial project. A facility that would previously have been capped at 500 kW for net-metering purposes, needing a separate arrangement, open access, a smaller system, or a split connection, for any capacity above that, can now net-meter the full amount up to 1 MW.

Here is what that gap is worth, using KERC's own assumptions, not a vendor estimate. KERC's tariff order assumes a 19% capacity utilisation factor for solar projects in the state.

Additional eligible capacity: 300 kW (the amount between the old 500 kW cap and the new 1 MW cap)
Annual generation: 300 kW × 19% CUF × 8,760 hours
= approximately 499,320 kWh per year

Value at the DSPV net-metering tariff of ₹2.37/unit:
499,320 × ₹2.37
= approximately ₹11.83 lakh per year

This is an illustrative calculation using KERC's stated CUF assumption and proposed tariff figure, not a promised result for any specific project. Actual generation depends on site conditions, system design, shading, and equipment performance, and actual billing depends on the customer's specific tariff category and sanctioned load. The point is directional: for a project previously sized to fit under 500 kW purely to preserve net-metering eligibility, the new cap removes a real constraint that had a real annual value attached to it.

Net metering, gross metering, and the VNM/GNM framework

The final regulations retain and build out a broader set of metering routes beyond a single net-metering option. Group Net Metering (GNM) allows one DSPV plant to offset consumption across multiple service connections, provided all participating connections share the same name and the same consumer category. Virtual Net Metering (VNM) and gross metering are also available, with all consumer categories eligible for gross metering.

For VNM and GNM specifically, export is valued at 75% of the generic KERC solar tariff, with time-of-day logic applied within corresponding peak and off-peak blocks. Feasibility approval runs through AEEE for standard systems, with EE-level coordination or authorisation required for ground-mounted VNM or systems exceeding 500 kWp. Smart meters are mandatory for all VNM and GNM participants.

One operational detail worth building into a proposal directly: a consumer can switch their metering mechanism only once over the life of a project. If a customer later increases or decreases their DSPV capacity, a new power purchase agreement is required, and the new tariff is set at 90% of the old tariff or the prevailing tariff, whichever is lower. That is a real, quantifiable downside to under- or over-sizing a system, not just a procedural inconvenience.

DISCOM process, penalties and what carries over from the old regulations

The regulations are enforced through Karnataka's DISCOMs, BESCOM, MESCOM, HESCOM, GESCOM and CESC Mysuru, and the applicable process depends on which one serves a given site. Domestic low-tension consumers installing DSPV systems up to 150 kW are exempted from signing a power purchase agreement. Above 150 kW, a standardised process applies with fixed timelines for site verification, PPA execution, inspection and commissioning.

Real penalties are attached to both sides of that process. DISCOM officials face a penalty if a completed plant is not commissioned within the prescribed inspection window. A consumer or EPC installing a "behind the meter" system without prior intimation to the DISCOM faces a separate one-time penalty. The 2016 regulations are repealed, but existing projects continue under their existing agreements, a genuine grandfathering provision, not a requirement to reapply under the new framework.

What EPCs should do now

Where 3D design and automated BOMs fit in

A tariff category or a net-metering cap does not change because a design tool exists, and 3D design software cannot confirm which DISCOM process applies to a specific site. What it can do is keep a project's actual sizing, equipment schedule and site layout consistent as a design changes, which matters directly here: a project resized from 500 kW to closer to the new 1 MW cap needs its layout, structural details, and bill of materials to reflect that change accurately, not carry over assumptions from an earlier, smaller design.

Reslink supports mobile site and roof mapping, automatic panel placement, live 3D revisions, PV and array layout drawings, and automated electrical and structural BOMs. For a Karnataka DSPV project being resized against the new cap, the practical benefit is a design and BOM that update together, rather than a manual re-check across separate drawings and spreadsheets.

To see how the design and documentation workflow can fit into your Karnataka EPC process, book a demo.

Frequently Asked Questions

Q1. What is the actual net-metering capacity limit in Karnataka now?

The finalised regulations set the net-metering capacity limit for Distributed Solar PV systems at 1 MW (1,000 kW), doubled from the 500 kW cap proposed in the June 2026 draft. This mainly changes the economics for commercial, industrial and institutional projects sized between 500 kW and 1 MW.

Q2. Is battery storage mandatory for solar projects in Karnataka?

No. The June 2026 draft proposed mandatory integrated battery storage for DSPV systems above 10 kW, but this requirement was withdrawn in the final regulations notified in August 2026. Storage remains an optional addition, not a regulatory condition.

Q3. Does Karnataka set a different tariff for DCR-compliant panels?

No. KERC's proposed tariff structure differentiates by consumer category (domestic vs. non-domestic) and system type (MW-scale, DSPV, PM Surya Ghar subsidised), not by whether the modules are DCR-compliant. DCR is a separate, national eligibility rule tied to specific central schemes, administered through MNRE's ALMM framework, not a Karnataka tariff category.

Q4. What's the difference between the DSPV Regulations and the tariff order?

They are two separate KERC processes covering the same 1 July 2026 to 30 June 2029 period. The DSPV Regulations, 2026 set the rules for connection, metering type, and operating conditions. The tariff order, issued as a discussion paper on 19 June 2026, sets the actual rupee-per-unit rates. An EPC needs to track both, not treat one as covering the other.

Q5. Can a Karnataka DISCOM require BESS for a solar-plus-storage project anyway?

The state-level mandate has been withdrawn, but this doesn't override project-specific requirements that might come from a customer's own resilience needs, a specific tender, or a scheme separate from the general DSPV regulations. Confirm the specific project's actual applicable rules rather than assuming the general removal covers every case.

Q6. Does the 1 MW cap change anything for a typical residential rooftop system?

Not meaningfully. Most domestic rooftop systems in Karnataka are well under even the previous 500 kW cap, so the increase to 1 MW primarily affects commercial, industrial and institutional consumers with higher demand, not residential customers.

Final takeaway

Karnataka's new DSPV framework changed in two specific, verifiable ways between the June 2026 draft and the August 2026 final notification: the net-metering cap doubled, and the proposed storage mandate disappeared entirely. Neither change is a residential story, both are aimed at removing friction for larger commercial and industrial projects specifically.

The tariff side of this, running on a separate but parallel track, is genuinely differentiated by consumer category and system type, not by module sourcing. Treating DCR eligibility and Karnataka's tariff category as the same check is a real, avoidable mistake, they are two different rules from two different authorities, and a proposal that conflates them risks quoting a customer the wrong rate or the wrong eligibility path entirely.

For EPCs with projects sized near the old 500 kW threshold, this is worth an active re-check now, not at the next scheduled proposal update.

Sources

• KERC Grid Interactive Distributed Solar Photovoltaic (DSPV) Plants Regulations, 2026, notification confirmation
• KERC draft DSPV Regulations 2026, gazette publication and public hearing detail
• KERC draft DSPV Regulations 2026, storage mandate and 500 kW cap detail
• Karnataka finalises 1 MW net-metering limit and storage mandate removal
• KERC 2026-29 tariff discussion paper, capital cost and financial norms
• KERC proposed 2026-29 tariff breakdown by consumer category
• KERC prior 2025-26 generic tariff order, domestic vs non-domestic rates
• KERC draft DSPV Regulations 2026, GNM/VNM eligibility and penalty detail
• MNRE ALMM List-II notice, national DCR and commissioning-window context

All rates, capacity thresholds and regulatory requirements should be rechecked against the final notified KERC order and the applicable DISCOM circular before quoting a specific project.