KSEB with new strategy, cites losses from solar to push for electricity tariff hike

THIRUVANANTHAPURAM: While both the central and state governments are promoting rooftop solar installations by offering subsidies, the Kerala State Electricity Board (KSEB) is now planning to increase electricity tariffs, citing losses incurred from solar power transactions.

KSEB claims that solar deals are resulting in financial losses and has requested a tariff hike of 19 paise per unit to compensate. Kerala is already among the states with the highest electricity rates in the country.

The board made the request for a tariff hike during the public hearing on the draft proposal put forward by the Electricity Regulatory Commission to amend the rules related to solar power. If the commission grants approval, KSEB will submit a detailed application with supporting calculations, after which the tariff hike will be implemented.

KSEB argues that while it purchases solar electricity during the day, it has to buy costlier power from external sources at night to supply solar producers, leading to a loss of at least Rs 500 crore. The Board claims it cannot continue without offsetting these losses.

However, there is strong public opposition to KSEB’s move, as it plans to shift the burden of solar-related losses onto non-solar consumers. Kerala has around 98 lakh domestic consumers, out of which only about 2,00,000 homes have rooftop solar systems. If the tariff hike is approved, legal complications may also arise.

Losses can be offset via battery storage

• If KSEB is incurring losses from solar energy transactions, the central government has recommended the use of Battery Energy Storage Systems (BESS) to mitigate the issue. Any costs incurred from setting up these storage systems can be covered through the Viability Gap Funding (VGF) scheme.
• With this system, solar energy captured during the day can be stored and used at night, avoiding the need to purchase expensive electricity from external sources and reducing associated losses.
• Both the central and state governments can also provide financial assistance to KSEB to cover any remaining losses. According to the Renewable Energy Obligation (REO) Act, each state must ensure that a certain percentage of its total electricity consumption comes from green energy.
• Due to this law, Kerala has had to buy solar energy from sources like Adani Power, but leveraging rooftop solar could reduce such dependency. In this context, KSEB’s move to increase tariffs instead of using available solutions is being seen with suspicion.