THIRUVANANTHAPURAM: Kerala's plan to add 300 MW of wind-power capacity has run into a disagreement between the state electricity utility and the power regulator over who should bear the cost if transmission infrastructure is not ready when wind projects are completed.
Under a programme approved earlier, the Kerala State Electricity Board Ltd (KSEB), the state-owned power utility, plans to procure 300 MW of wind power through tariff-based competitive bidding. Developers will identify suitable land within Kerala and set up the projects.
A provision in the proposed power purchase agreement (PPA), however, has become a point of contention. KSEB has decided to seek a review of a direction issued by the Kerala State Electricity Regulatory Commission (KSERC), which requires two separate clauses dealing with transmission delays and temporary grid unavailability to be merged.
KSEB wants the two clauses to be retained separately.
The proposed wind-power procurement comes against the backdrop of rising electricity demand in Kerala, which remains heavily dependent on power purchased from outside the state.
The state's peak-hour demand touched a record 6,033 MW in April 2026, while daily electricity consumption also reached record levels during the month.
Hydropower accounts for nearly 52 per cent of Kerala's installed generation capacity, with solar, thermal and wind making up the rest. However, electricity generated within the state from hydropower, solar and wind sources met only around 29 per cent of its total consumption in FY2024-25, underlining its dependence on power purchases from outside.
Solar, wind power crucial
Expanding renewable energy sources such as solar and wind is important for Kerala to diversify its energy mix and reduce dependence on external power purchases. The state's dependence on hydropower also makes electricity generation vulnerable to fluctuations in rainfall and reservoir levels.
Wind power, in particular, remains largely untapped in Kerala. The state had just 71.5 MW of installed wind capacity as of June 2026, against India's total of 57,443 MW.
Wind generation in Kerala was only 130 million units in FY2025-26, compared with India's 106,699 million units.
India added a record 6,057 MW (6.057 GW) of wind-power capacity in FY2025-26, taking its total installed capacity to 57,443 MW.
Under the proposed 300 MW programme, KSEB plans to invite bids from developers who would identify suitable land within Kerala, set up wind-power projects and sell the electricity generated to the utility at competitively discovered tariffs.
Disputed provisions
The regulatory disagreement concerns two provisions in the draft PPA. One deals with a situation in which a wind project is ready to generate electricity but cannot supply it because the designated transmission infrastructure is incomplete. The other concerns an operational wind farm that is temporarily unable to transmit electricity because of grid unavailability.
Under the first provision, if a wind farm is ready but cannot supply power because the transmission network is incomplete, the developer would be allowed to make up for the lost generation over the succeeding three contract years. KSEB would have to purchase the additional electricity at the agreed tariff. The generation loss would be calculated using the minimum capacity utilisation factor (CUF) specified in the agreement.
KSERC, in its June 10, 2026 order, directed KSEB to delete the first provision and merge it with the second.
KSEB, however, argues that the two clauses address different situations and should remain separate. It says delays in developing transmission infrastructure can arise from land acquisition, environmental clearances, statutory approvals and difficulties in obtaining right of way for transmission lines, many of which are beyond the utility's control.
The Board has also argued that compensation calculated under the prescribed formula could exceed the revenue the developer would have earned by selling the electricity generated.
The full-time directors of KSEB have now approved approaching KSERC with a request to reconsider its direction and retain the two clauses in their original form.
The dispute highlights a wider challenge in renewable-energy expansion: generating electricity is only part of the task, as transmission infrastructure must also be ready to carry the power to the grid. The outcome could have implications for how financial risks arising from such delays are shared between electricity utilities and renewable-energy developers.
