An Overview And Analysis Of The Karnataka’s Draft Electricity Regulatory Commission (KERC) Regulations, 2026

1.     Introduction

On 4 June 2026, the Karnataka Electricity Regulatory Commission (“KERC”) released the draft Karnataka Electricity Regulatory Commission (Connectivity and General Network Access to the Intra-State Transmission System and State Distribution System) Regulations, 2026 (“Draft Regulations”). The proposed framework seeks to replace the existing Long-Term Open Access (LTOA), Medium-Term Open Access (MTOA) and Short-Term Open Access (STOA) regime with a comprehensive General Network Access (“GNA”) framework governing connectivity, network access and utilisation of the intra-state transmission and distribution network.

The Draft Regulations represent a significant regulatory shift towards a capacity-based access model aligned with evolving electricity market structures, increasing renewable energy penetration, growth of green open access transactions and the emergence of energy storage systems. If implemented in their present form, the Regulations are likely to reshape how renewable energy developers, commercial and industrial consumers, captive generating plants, battery energy storage operators and power traders access and utilise Karnataka’s electricity network.

2.     A Fundamental Shift from Transaction-Based Access to Capacity-Based Rights

Network access in India has so far been structured around identified transactions and specific contractual arrangements. Access rights were generally linked to designated beneficiaries, fixed power procurement structures and predefined electricity flows. Such a framework was suitable during an era dominated by long-term power purchase agreements and vertically integrated utility operations.

The contemporary electricity market, however, operates very differently. Renewable energy generators frequently supply power to multiple consumers. Group captive structures continue to evolve. Commercial and industrial consumers regularly modify procurement strategies in response to market conditions. Power exchanges facilitate transactions that may be concluded and settled within a matter of hours. Energy storage systems alternately draw and inject power depending upon grid requirements and commercial opportunities.

Recognising these realities, the Draft Regulations replace the traditional LTOA, MTOA and STOA framework with a General Network Access regime supplemented by Temporary General Network Access (“T-GNA”). Existing LTOA and MTOA grantees are proposed to be transitioned into the GNA framework, ensuring continuity while moving towards a more flexible network access architecture.

The significance of this reform lies in the fact that network access is no longer linked to a particular transaction. Instead, access rights are based upon network capacity. This transition from contract-based regulation to capacity-based regulation represents the cornerstone of the Draft Regulations and is expected to enhance market flexibility while improving transmission system utilisation.

3.     Existing Open Access Framework versus Draft GNA Framework

4.     Connectivity Becomes Distinct from Network Access

A significant conceptual reform introduced by the Draft Regulations is the separation of connectivity from network access. Connectivity establishes the physical connection between a generating station, captive generating plant, renewable power park, energy storage system or consumer and the network. However, General Network Access, governs the right to inject or draw electricity from the system.

This distinction mirrors international best practices and provides greater clarity regarding the rights and obligations of market participants. It also enables transmission planning to be undertaken independently of specific commercial arrangements.

The Draft Regulations prescribe separate eligibility criteria depending upon whether connectivity is sought at the intra-state transmission system level or the distribution system level.

Connectivity Eligibility Matrix

The breadth of entities covered by the framework demonstrates KERC’s intent to create a unified regulatory architecture capable of supporting both conventional and emerging electricity market participants.

5.     Renewable Energy Integration and the Introduction of Solar-Hour Access

Among the most innovative aspects of the Draft Regulations is the introduction of solar-hour access and non-solar-hour access. Karnataka remains one of India’s leading renewable energy jurisdictions. However, the rapid growth of solar and wind generation has increasingly highlighted the need for more efficient utilisation of transmission infrastructure. Under traditional frameworks, transmission capacity allocated to solar projects often remained underutilised during periods when solar generation was unavailable.

The Draft Regulations seek to address this inefficiency through a differentiated access regime. Renewable Energy Generating Stations based on solar resources and Renewable Hybrid Generating Stations containing a solar component may be granted solar-hour access, allowing transmission capacity to be utilised more efficiently during non-solar periods by other generators or energy storage systems.

This approach reflects a growing regulatory recognition that transmission capacity should increasingly be allocated based upon actual operational characteristics rather than static project parameters. If implemented effectively, the framework could improve corridor utilisation, reduce curtailment risks and defer costly transmission expansion requirements.

The proposed framework also creates opportunities for hybrid renewable energy projects and battery energy storage systems to optimise network utilisation while improving project economics.

6.     Energy Storage Systems Move into the Mainstream

One of the most forward-looking aspects of the Draft Regulations is the treatment accorded to Energy Storage Systems (“ESS”). As renewable energy penetration increases, energy storage is becoming indispensable for maintaining system reliability, balancing intermittent generation and facilitating electricity market participation.

The Draft Regulations expressly recognise standalone ESS projects as eligible entities for both connectivity and GNA. They also introduce concepts such as Lead ESS and shared infrastructure arrangements, allowing storage assets to participate more actively within the network access framework.

This development is particularly significant given the growing policy emphasis on battery energy storage deployment across India. By providing regulatory certainty regarding connectivity and network access rights, the Draft Regulations may encourage investment in standalone storage projects, renewable-plus-storage configurations and emerging ancillary service opportunities. The framework therefore reflects a broader understanding that India’s energy transition will depend not only upon renewable energy generation but also upon the flexibility resources required to integrate renewable energy into the grid.

7.     Connectivity Bank Guarantees

A notable feature of the Draft Regulations is the introduction of a structured bank guarantee framework intended to ensure project seriousness and facilitate network planning.

Connectivity Bank Guarantee Framework

The three-tier structure seeks to address a recurring challenge faced by transmission planners: speculative connectivity applications. By linking financial commitments to project progression and infrastructure development requirements, the Draft Regulations aim to improve planning certainty and reduce the risk of stranded network investments.

The framework also establishes clear timelines regarding submission of guarantees, furnishing of augmentation costs and execution of associated transmission infrastructure. Failure to comply may result in forfeiture of application fees, encashment of guarantees or closure of applications.

From a commercial perspective, these provisions are likely to encourage greater project discipline while ensuring that network expansion costs are appropriately allocated among beneficiaries.

8.     Temporary General Network Access and the State Open Access Registry

The Draft Regulations also introduce Temporary General Network Access, which effectively replaces the traditional short-term open access framework.

T-GNA is designed to facilitate access ranging from a single 15-minute time block to periods extending up to eleven months. This flexibility is particularly important given the increasing prominence of power exchanges, real-time markets and merchant renewable energy transactions.

To support implementation, KERC proposes the establishment of the State Open Access Registry (“SOAR”), which will function as a centralised digital platform for processing open access applications and coordinating market transactions.

The creation of SOAR represents a significant digitalisation initiative. Modern electricity markets require transparent, automated and time-sensitive processing of transmission access requests. By integrating access management with market operations, SOAR has the potential to improve efficiency while reducing administrative burdens.

The framework also discourages excessive reliance on temporary access by imposing escalating transmission charge multipliers where market participants repeatedly utilise T-GNA in lieu of securing appropriate long-term network rights.

9.     Commercial Framework

Beyond connectivity and network access, the Draft Regulations establish a detailed commercial framework governing the use of transmission and distribution infrastructure.

Commercial Charges Framework

The introduction of a comprehensive commercial framework is intended to ensure that network costs are recovered efficiently while preserving incentives for optimal utilisation of infrastructure.

Particularly noteworthy are the provisions governing relinquishment of GNA. Entities seeking to surrender network access rights may be required to provide substantial advance notice and pay relinquishment charges depending upon the circumstances of relinquishment. These provisions are designed to protect transmission planning assumptions and mitigate the risk of stranded capacity.

Similarly, the continued availability of renewable energy banking, subject to prescribed charges and conditions, remains an important feature for renewable energy developers and open access consumers seeking operational flexibility.

10.  Implications for Renewable Energy Developers and Commercial Consumers

The Draft Regulations are likely to have several important implications for renewable energy developers operating within Karnataka.

1. The transition from transaction-specific open access approvals to a capacity-based GNA framework may provide greater commercial flexibility by allowing developers to optimise power sales across multiple consumers without repeatedly restructuring transmission access arrangements.
2. The introduction of solar-hour and non-solar-hour access creates opportunities for improved utilisation of transmission corridors. Developers of hybrid renewable energy projects may particularly benefit from the ability to optimise transmission capacity across different generation profiles.
3. The express recognition of Energy Storage Systems (“ESS”) within the connectivity and GNA framework is expected to encourage greater deployment of battery storage projects and renewable-plus-storage configurations. Storage assets may also benefit from access to transmission capacity that becomes available during non-solar hours.
4. Renewable energy developers will need to carefully evaluate the financial implications of the new connectivity bank guarantee framework. The introduction of Conn-BG1, Conn-BG2 and Conn-BG3 increases project discipline but may also increase upfront capital commitments and project development costs.
5. Developers proposing large-scale renewable energy parks, clustered renewable energy projects or shared evacuation infrastructure may benefit from the Lead Generator and shared connectivity concepts introduced under the Draft Regulations. These mechanisms could reduce infrastructure duplication and improve project economics.
6. The establishment of the State Open Access Registry (“SOAR”) and the introduction of T-GNA are expected to improve access to short-term and exchange-based electricity markets. This may create additional revenue opportunities for renewable energy generators participating in merchant power transactions.
7. Developers must carefully assess the commercial implications of relinquishment provisions, transmission charges, banking charges and security deposit requirements, as these obligations may have a direct impact on project viability and long-term operational planning.
8. The proposed framework signals a broader regulatory movement towards efficient transmission utilisation and dynamic capacity allocation. Future project development strategies may increasingly need to account for transmission optimisation considerations alongside traditional land, resource and offtake assessments.

11.  Conclusion

The Draft Karnataka Electricity Regulatory Commission (Connectivity and General Network Access to the Intra-State Transmission System and State Distribution System) Regulations, 2026 represent a fundamental reimagining of network access regulation within the State. By replacing traditional open access categories with General Network Access, introducing Temporary General Network Access, establishing the State Open Access Registry, recognising energy storage systems and creating mechanisms for more efficient utilisation of transmission corridors, KERC has proposed a framework designed for the next generation of electricity markets.

The Draft Regulations reflect the broader evolution of India’s electricity sector towards renewable energy integration, market-based transactions, grid flexibility and infrastructure optimisation. While stakeholder consultations are likely to focus on implementation details, capacity allocation methodologies and commercial implications, the direction of regulatory reform is unmistakable. Karnataka is positioning itself at the forefront of state-level electricity market modernisation and, in doing so, may establish a model that other jurisdictions seek to emulate in the years ahead.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.