The Kerala State Electricity Board (KSEB) has raised concerns over a growing financial burden it says may result from the state’s solar energy boom. According to a recent estimate reported, the board could face an annual income loss of up to ₹500 crore by the end of 2024–25 as rooftop solar generation rises sharply.
This warning comes at a time when Kerala’s installed rooftop solar capacity has touched around 1,397 MW—a jump driven by net metering and falling solar panel costs. But while this may sound like progress on the renewable front, KSEB is worried it’s creating unexpected complications for grid management and revenue.
KSEB's main concern is simple: consumers who install rooftop solar panels generate electricity during the day, feed the excess back into the grid, and later draw power from the system at night—usually when the state depends on costly imports from the national grid or private producers.
This banking of power, which works well for consumers, reportedly ends up hurting the utility. KSEB still has to maintain round-the-clock infrastructure and buy expensive power during peak hours, even though daytime demand is dipping because of solar usage.
According to internal calculations, this imbalance could mean a tariff hike for others. The board estimates a likely surcharge of 19 paise per unit to offset losses. If solar installations continue to grow at the current pace, this surcharge could rise to 40 paise per unit by 2034–35.
There’s also a technical side to the story. Too much unregulated solar power being pushed into the grid during off-peak hours could create instability. Since the electricity grid has to stay balanced at all times, KSEB often has to take last-minute corrective measures—which attract deviation penalties. These costs, again, are absorbed by the board and passed on to consumers who don’t generate solar power.
This situation has put pressure on the Kerala State Electricity Regulatory Commission (KSERC), which is now drafting new rules to manage the shift. The next regulatory period runs from 2025 to 2029, and the new proposals aim to plug the widening gap between production and cost recovery.
The KSERC draft includes a possible shift away from net metering to net billing or gross metering for new connections. In simple terms, this could mean solar users may be paid differently for the power they generate—and possibly less generously.
However, the proposed changes will not affect current rooftop solar users or households with systems up to 3 kW. Agricultural users also remain exempt from the shift. The state wants to encourage more solar adoption in these categories, especially in rural areas.
The new rules are also likely to support solar users who invest in battery storage systems, which could help store excess power locally and reduce dependency on the grid at night. If adopted, this could make the overall solar system more stable and reduce KSEB’s balancing costs.
