Kerala Unveils Draft Renewable Energy Regulations 2025 for Solar, Storage, and Prosumers
Kerala’s draft Renewable Energy Regulations 2025 introduce comprehensive norms for solar, energy storage, and prosumers, including peer-to-peer trading, faster approvals, RPO/ESO mandates, and flexible metering options.
June 02, 2025. By EI News Network

The Kerala State Electricity Regulatory Commission (KSERC) has released the draft of the proposed regulations, namely, the ‘Kerala State Electricity Regulatory Commission (Renewable Energy and Related Matters) Regulations, 2025’, inviting public comments within one month from its publication on May 30.
The new regulations aim to create a unified and future-ready framework covering tariff determination, energy accounting, billing, metering, and open access for a wide range of renewable energy systems, including Battery Energy Storage Systems (BESS) and Pumped Storage Plants (PSPs).
Applicable across the state, the regulations will impact prosumers, captive generating plants (CGPs), independent power producers (IPPs), and distribution licensees. While the regulations will come into force upon gazette notification, provisions related to energy accounting and billing under Chapter III will be effective from October 1, 2025. Systems connected after the enforcement date must follow new billing norms, whereas existing systems will continue under the 2020 regulations until September 30. Existing prosumers will stay on net metering unless they opt to upgrade, exit, or reach the end of the system’s life cycle. A public hearing will also be held, with the date and venue to be announced separately.
KSERC has also introduced the Renewable Energy and Net Metering Regulations, 2025, offering flexible choices for prosumers. Residential, agricultural, and industrial consumers can now choose Net Metering (1–3 kW, or up to 5 kW with battery), Net Billing (up to 500 kW), or Gross Metering (up to 3 MW). The regulations also support advanced models like Virtual Net Metering (for shared systems in apartments, public buildings, and low-income households), Group Net Metering (for consumers with multiple service connections), Behind-the-Meter generation, and Virtual Power Plants.
Application processes are streamlined through online portals, with strict deadlines of 15 days for feasibility approval and 3 days for registration. All approvals must be completed within 135 days. Kerala is also paving the way for next-gen energy models such as Vehicle-to-Grid (V2G), Peer-to-Peer solar trading via blockchain, and dynamic Virtual Power Plants for real-time grid balancing. Consumers requiring grid upgrades will need to bear the associated costs.
On energy settlement, Net Metering allows offsetting consumption with solar generation and banking the surplus with time-of-day normalization. Surplus energy will be compensated at either the average pooled power purchase cost (APPC) for older systems or 75 percent of SECI’s FY25 bid rates for new systems. Net Billing credits exported energy at a feed-in tariff (1.5x tariff during peak hours, SECI average otherwise) that adjusts against the total electricity bill. Gross Metering compensates all exported energy at 125 percent of SECI’s FY25 discovered rates, with peak-time solar plus storage fetching up to INR l7/kWh.
Virtual and Group Net Metering mechanisms follow the same banking and compensation mechanisms as Net Metering, but may incur grid support charges (initially Re. 1/unit), while domestic and agricultural consumers are exempt. Consumers can share generation across locations and accounts, with wheeling and transmission charges determined by proximity.
Chapter IV of the regulations mandates Renewable Purchase Obligation (RPO) and Energy Storage Obligation (ESO) compliance for distribution licensees, captive users consuming over 250 kW of fossil fuel, and open access consumers with contract demand above 1000 kVA. Annual targets for RPO and ESO will rise progressively, and ESO will count toward meeting RPO compliance. Obligated entities can meet targets through self-generation, open access purchases, power from licensees at a green energy tariff, captive plants, or Renewable Energy Certificates (RECs). A State Agency will oversee compliance through a centralized renewable energy web portal, where monthly data submissions will be mandatory. The Commission may enforce compliance via REC purchase, carry-forward provisions, or obligation relaxation, with a preference for intra-state procurement. The State Agency will also support consumers with guidance and data.
Chapter V lays down the framework for tariff determination, prioritizing tariff-based competitive bidding (TBCB) for renewable energy procurement by licensees, excluding distributed energy resources (DER). The tariffs will apply to all projects commissioned during the control period, and in case of delay in issuing new regulations, norms from the Central Electricity Regulatory Commission (CERC) will be used provisionally. Tariffs will follow a single-part structure, levelized over the useful life of projects and factoring in return on equity (RoE), loan interest, depreciation, working capital interest, and operations & maintenance (O&M) costs. Beneficiaries have the first right to purchase excess generation beyond the declared CUF at 80 percent of the applicable tariff.
Normative financial principles include a 70:30 debt-equity ratio, 15-year loan tenure with interest at 200 basis points above the SBI MCLR, and up to 90 percent depreciation. RoE is capped at 14 percent for most RE projects and 15 percent for hydro. Tax reimbursements, capital subsidies, CDM benefits, and payment timelines are factored into the tariff. Technology-specific cost norms, capital costs, and auxiliary consumption are to be defined in detailed schedules.
Small Hydro Electric Projects (SHEPs) will have normative capital costs ranging from INR 890 to INR 1200 lakh/MW depending on capacity, with a normative CUF of 30 percent. Projects with pump storage capability that supply during lean solar hours will be eligible for a 125 percent peak-time tariff. Solar PV, thermal, floating solar, RDF-based municipal waste, and biomass projects will have project-specific costs and parameters, with detailed CUF and O&M benchmarks. Hybrid and storage-integrated RE projects will follow composite tariffs, and BESS projects will have ToD-based or energy/capacity-based pricing, subject to minimum 85 percent round-trip efficiency and availability guarantees.
KSERC has also allowed for deviations from normative parameters where justified, as long as tariffs remain within approved ceilings. In a progressive move, the Commission is promoting hydro tourism and silt sales as alternative revenue streams for hydro/PSP developers and expects KSEB Ltd to explore additional generation and PSP opportunities in existing hydro reservoirs within a year.
With these sweeping reforms, Kerala is not only aligning with national energy transition goals but is also positioning itself as a leader in decentralized, consumer-friendly, and storage-integrated renewable energy systems.
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