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The Karnataka Electricity Regulatory Commission has issued a new order setting the generic ceiling tariff for wind power projects for the period from FY2026-27 to FY2028-29. The decision, announced on April 30, 2026, is aimed at creating a clear pricing structure for electricity distribution companies to procure wind energy through competitive bidding, while ensuring that tariffs remain affordable for consumers.
Under the new framework, the Commission has fixed the ceiling tariff at ₹3.24 per unit. This tariff will act as the maximum rate at which power can be procured, helping to control costs while still encouraging private sector participation in the renewable energy market. The order follows a detailed consultative process that included a discussion paper released in March 2026 and a public hearing held on April 28, where various stakeholders shared their views.
Industry bodies such as the Indian Wind Power Association and the Indian Wind Energy Association raised concerns about rising project costs. Developers highlighted that the earlier capital cost estimate of ₹6.50 crore per MW no longer reflects current market conditions. Prices of key materials like copper, aluminium, and steel have increased significantly, driven by global supply chain disruptions and geopolitical issues. In addition, modern wind turbines now require taller towers and larger rotors, which increase installation and transportation costs.
Taking these factors into account, the Commission revised the capital cost benchmark upward to ₹7.25 crore per MW. This adjustment is expected to better reflect the actual investment required for new wind projects.
The Commission also addressed Operation and Maintenance expenses. Developers had sought higher allowances due to the complexity of new technologies, but the regulator approved a base rate of ₹11.25 lakh per MW for the first year, with an annual escalation of 4.5%. This approach aims to balance developer needs with consumer interests.
On performance, the Capacity Utilization Factor has been retained at 33%. The Commission noted that improvements in turbine technology should help projects achieve this level even in moderate wind conditions.
Financial parameters such as a 14% Return on Equity and a 9.5% interest rate on debt have also been maintained, aligning with current lending trends from institutions like the Indian Renewable Energy Development Agency and Power Finance Corporation. The order provides clarity for the wind sector in Karnataka and is expected to support steady growth in renewable energy over the next three years.
