Kerala's rapid rooftop solar expansion is boosting green energy but straining electricity users financially.
The Kerala State Electricity Board warns that without urgent policy changes, net metering rules could increase bills by up to 39 paise per unit by 2035.
Proposed reforms include mandatory battery storage for larger systems to ease grid pressure and ensure fair pricing.
Kerala’s rapid ascent in India’s rooftop solar revolution has brought a green energy boost—but also a growing financial strain for ordinary electricity users.
The Kerala State Electricity Board (KSEB) has raised concerns that, unless urgent policy corrections are made, current net metering rules could raise electricity bills by up to 39 paise per unit by 2035, putting pressure on households and threatening grid stability.
Kerala now ranks fourth nationally in rooftop solar capacity, behind only Gujarat, Maharashtra, and Rajasthan—having leapfrogged many other southern states. This success is the result of a fast-expanding solar ecosystem, built through pioneering programs like Soura, the Solar City Project, and more recently, the PM Surya Ghar Yojana.
Years before the national scheme was launched in 2024, Kerala introduced the Soura program under the Urja Kerala Mission (2019-20), becoming one of India’s first DISCOM-led rooftop solar initiatives. KSEB installed rooftop panels at its own expense, while customers rented out their roof space and received 10 per cent of the generated power free, reducing consumer risk and building early trust in solar energy.
This strong foundation led to a near doubling of the state’s rooftop solar capacity since 2023. By October 2024, Kerala had 152,000 rooftop solar systems totaling 946.9 MW, supplying 22 per cent of the state’s daytime demand. A robust installer ecosystem (around 2,000 vendors) and strong public awareness helped Kerala achieve a 60.13 per cent application-to-installation conversion rate under the PM Surya Ghar program—among the highest in India.
However, despite this technical and programmatic success, only two per cent of Kerala’s 13 million power consumers have rooftop solar—while the remaining 98 per cent are now facing rising costs due to how the net metering and banking system currently works.
Unlike other states where solar output aligns with peak power needs, Kerala’s peak demand occurs between 6 pm and 11 pm—after sunset. Solar users consume only 36 per cent of their generated electricity during the day, while the remaining 64 per cent is exported to the grid. Of this, 45 per cent is later withdrawn at night through a “banking” system.
This puts KSEB in a tight spot. The utility must buy expensive power from the market to supply prosumers at night and still compensate them for solar fed into the grid during the day—despite this power not addressing peak-time shortages. In 2024-25 alone, this mismatch led to losses of over Rs 500 crore, adding 19 paise per unit to all consumers’ bills.
If large rooftop systems (above 3kW) continue to grow without battery storage, the cost impact could rise to 39 paise per unit by 2034-35, raising questions about fairness and financial sustainability.
Beyond economics, grid engineers are warning of technical challenges too. Surging midday solar inflows are pushing up grid voltage levels, especially in urban and semi-urban areas, putting household appliances at risk. With low daytime demand and rising power injection from rooftops, KSEB may soon be forced to disconnect solar feeders during peak generation hours to protect grid health—potentially undermining consumer confidence in rooftop solar itself.
With the draft Renewable Energy Regulation 2025 currently under discussion, KSEB is pushing for major reforms to address these growing challenges:
Mandatory battery storage: Rooftop systems above 3kW should be eligible for net metering only if paired with battery storage. This would allow prosumers to use more of their own solar power at night and ease pressure on the grid.
Net metering caps: Small systems (≤3kW) and agricultural users would continue under existing net metering rules. Larger commercial and industrial systems may shift to net billing or gross metering, linking payments more closely to actual market rates and grid benefits.
No changes for existing prosumers: All current net metering users would be allowed to continue under their current terms—ensuring investment confidence and preventing abrupt policy shifts.
Public feedback is currently being gathered before final decisions are made. However, KSEB’s message is clear: without timely reforms, both the costs and the risks of the solar surge will fall on the majority of non-solar users.
Kerala’s solar journey is a story of early innovation, citizen participation, and bold policy. But the next phase demands a more calibrated approach—one that protects consumers, ensures grid reliability, and promotes clean energy growth without destabilising the system.
Battery storage is another option. Tamil Nadu Power Generation Corporation Limited (TNPGCL) plans to set up a 200 MW battery storage system at the North Chennai Power Station on a pilot basis. The state faced a loss of around Rs 3,000 crore in 2024-25 due to frequent shutdowns of thermal power plants caused by low demand. While 200 MW may not fully solve the issue, it is seen as a step towards reducing such shutdowns and restarts. TNPGCL aims to install battery systems across all its plants with a total capacity of 5 GW.
KSEB should also explore similar options. Battery storage can help meet evening demand and reduce reliance on expensive power purchases. However, small battery systems for rooftop solar need careful planning, as they add to costs and could lead to more battery waste in the future.
The state should consider a RESCO (Renewable Energy Service Company) model for rooftop solar systems above 3 kW. Under this, third-party companies install and operate systems at no upfront cost, and consumers pay only for power used—at rates lower than grid tariffs. This approach can help match solar generation with actual demand, easing grid stress caused by excess injection. Utility-led demand aggregation and competitive bidding would ensure fair pricing and better service. Importantly, RESCO developers can also add battery storage to store surplus solar power for evening use, helping reduce KSEB’s financial losses during peak hours.
As India moves toward higher solar targets, Kerala’s experience highlights a larger national dilemma: how to balance rooftop solar expansion with technical limits, fair pricing, and long-term sustainability—especially in regions where daytime generation and night-time consumption don’t align.