Karnataka streamlines PPA renewal process for ageing renewable power projects
The Karnataka Electricity Regulatory Commission (KERC) has issued a suo motu order introducing a streamlined framework for the renewal of Power Purchase Agreements (PPAs) for Mini-Hydro, Wind, Bagasse-based Cogeneration and Biomass-based power plants completing their initial 20-year term. The order, issued on July 1, 2026, aims to address delays in PPA renewals that have resulted in generators supplying electricity without valid agreements and facing payment uncertainties.
KERC observed that despite its suo motu order dated March 4, 2024, directing electricity supply companies (ESCOMs) to initiate PPA renewals and submit the agreements for approval, proposals have continued to reach the Commission with significant delays, often after the expiry of the original PPA period.
The Commission also noted that generators have been approaching it to seek condonation of delays, even though the existing PPAs require the renewal process to be completed before the expiry of the initial 20-year term.
Revised renewal framework
Under the revised framework, Mini-Hydro and Wind generators intending to continue supplying electricity to ESCOMs for an additional 10 years must submit their renewal application at least 90 days before the expiry of the initial agreement period.
The application must include the generator’s consent to supply power at 85% of the 20th-year tariff or a negotiated tariff, whichever is lower.
After receiving the application, the concerned ESCOM must decide whether it intends to continue procuring power beyond the initial 20-year term. If the utility requires power, it must negotiate the tariff before executing the renewal. The final tariff will be determined in accordance with KERC’s March 4, 2024 order.
If the ESCOM does not require power, it must inform the generator before the expiry of the existing PPA.
Deemed approval
The order requires ESCOMs to execute the renewal PPA or supplementary PPA before the expiry of the initial agreement, extending the contract by 10 years from the completion of the original 20-year term.
KERC said such renewed PPAs will be deemed approved by the Commission. Where a generator has applied within the prescribed timeline but the ESCOM fails to act, the PPA will be deemed extended in line with the Commission’s March 4, 2024 order.
The deemed approval will remain subject to KERC’s final decision in the event of any disputes or errors in the renewed agreements.
ESCOMs have also been directed to submit copies of the renewed PPAs to the Commission for information along with the applicable fee.
The Commission said the framework is intended to ensure timely execution of renewal agreements, prevent generators from operating without valid PPAs and facilitate timely payment for electricity supplied to the grid.
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