The Karnataka Electricity Regulatory Commission (KERC) has issued a suo-motu order to address long-pending delays in the renewal of Power Purchase Agreements (PPAs) for renewable energy projects across the state. The order, dated July 1, 2026, introduces a system of “deemed approval” for PPAs that have completed or are close to completing their initial 20-year term. The move is aimed at ensuring timely renewal of agreements for Mini-Hydro and Wind power projects and preventing unnecessary delays in payments to renewable energy generators.
The commission noted that despite its March 2024 order, which fixed the tariff framework for the next 10 years after the completion of the initial PPA period, many Electricity Supply Companies (ESCOMs) and power generators failed to complete the renewal process on time. Instead, they continued approaching the commission with requests for extensions and delay condonation even after the agreements had expired.
As a result, several renewable energy generators continued supplying electricity to the state grid without a valid contract, leading to delays in receiving payments for the electricity they supplied. To resolve this issue, KERC has introduced a clear and time-bound renewal process.
Under the new order, Mini-Hydro and Wind power generators that wish to continue supplying electricity for another 10 years must submit their renewal application at least 90 days before the expiry of their existing PPA. They must also agree to sell power at either 85% of the tariff applicable during the 20th year or at a mutually negotiated tariff, whichever is lower.
After receiving the application, the concerned ESCOM must assess its power requirement before the PPA expires. If it requires the power, it must negotiate the tariff and execute the renewed agreement. If the power is not required, the ESCOM must inform the generator before the agreement expires.
KERC has also ruled that such renewed PPAs will be treated as “deemed approved,” removing the need for separate regulatory approval and reducing administrative delays. If a generator applies on time but the ESCOM fails to complete the renewal before the expiry date, the PPA will automatically continue under the terms of the March 2024 order. However, the commission will continue to monitor these agreements, and ESCOMs must submit copies of all renewed PPAs along with the applicable fees for record purposes. This decision is expected to provide greater certainty for renewable energy developers and ensure uninterrupted supply of clean electricity to Karnataka’s grid.
