Bangalore, March 2026 – The Bangalore Electricity Supply Company (Bescom) has formally invited tenders for a 500 megawatt solar power project under the Karnataka government’s Mukya Mantri Soura Shakti scheme, a flagship renewable energy programme announced in the state budget presented in March 2026. The tender, published on Bescom’s official procurement portal, marks the first major implementation step for a scheme modelled on the central government’s Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM‑KUSUM) and designed to accelerate Karnataka’s transition toward its renewable energy targets.
What happened
Bescom’s tender notice, issued in the third week of March 2026, calls for technical and financial proposals from eligible developers, engineering‑procurement‑construction (EPC) contractors, and joint ventures for the design, supply, installation, and commissioning of grid‑connected solar photovoltaic capacity totalling 500 MW. The scope of work includes land identification and acquisition support, evacuation infrastructure up to the nearest substation, and operation and maintenance for a period of 25 years from the commercial operation date.
According to the tender document, bidders must demonstrate a minimum cumulative solar project execution experience of 100 MW over the past five years and a net worth of not less than ₹300 crore as per the latest audited financial statements. The selection process follows a two‑stage evaluation: technical qualification followed by a reverse auction on tariff, with the lowest levelised tariff (₹/kWh) determining the successful bidder. The deadline for submission of proposals is set for 30 April 2026, with technical bids opening on 5 May 2026 and the reverse auction scheduled for 15 May 2026.
The project will be developed under the “Component‑A” framework of the Mukya Mantri Soura Shakti scheme, which provides for decentralised solar plants of 0.5 MW to 10 MW capacity on barren, fallow, or agricultural land, with power purchased by Bescom at the discovered tariff under a 25‑year power purchase agreement (PPA). The scheme also incorporates a viability gap funding (VGF) component of up to 30 per cent of the project cost, capped at ₹1 crore per MW, to be disbursed in tranches linked to commissioning milestones.
Why it matters
The 500 MW tender represents the single largest solar procurement exercise undertaken by Bescom to date and is expected to contribute approximately 850 million units of clean energy annually, offsetting an estimated 700,000 tonnes of carbon dioxide emissions. For Karnataka, which already leads southern states in installed renewable capacity at over 30 GW as of December 2025, the project advances the state’s goal of achieving 50 per cent of its installed capacity from non‑fossil sources by 2030 — a target aligned with India’s nationally determined contributions under the Paris Agreement.
The initiative also addresses a persistent structural challenge in Karnataka’s power sector: the seasonal variability of hydroelectric generation, which accounts for roughly 25 per cent of the state’s energy mix but declines sharply during the summer months. Solar generation peaks during the same period, offering a natural hedge against hydro shortfalls and reducing the need for expensive short‑term power purchases on the exchange, where prices frequently exceed ₹8‑10 per unit during peak demand.
For Bescom, the largest of Karnataka’s five electricity supply companies (escoms) serving over 12 million consumers across eight districts including Bengaluru Urban and Rural, the project supports its renewable purchase obligation (RPO) trajectory. The Karnataka Electricity Regulatory Commission (KERC) has mandated an escalating solar RPO of 10.5 per cent for FY 2025‑26, rising to 14 per cent by FY 2029‑30. Bescom’s current solar procurement stands at approximately 8.2 per cent of total energy input, leaving a compliance gap that the 500 MW addition would substantially close.
Background and context
The Mukya Mantri Soura Shakti scheme was unveiled by Chief Minister Siddaramaiah in the Karnataka budget for 2026‑27, presented on 7 March 2026. The budget allocated ₹2,500 crore for the scheme’s first phase, targeting 2,000 MW of decentralised solar capacity over three years. The programme draws direct inspiration from PM‑KUSUM, launched by the Ministry of New and Renewable Energy (MNRE) in 2019, which aims to add 30.8 GW of solar capacity through three components: decentralised ground‑mounted plants (Component‑A), standalone solar pumps (Component‑B), and solarisation of grid‑connected agricultural pumps (Component‑C).
Karnataka’s adaptation modifies the central template in several respects. First, it expands eligibility to include non‑agricultural landholders and community‑based organisations, broadening the pool of potential project sites. Second, it introduces a streamlined single‑window clearance mechanism through the Karnataka Renewable Energy Development Limited (KREDL), reducing the average project development timeline from 18‑24 months to an estimated 10‑12 months. Third, the state scheme provides for a higher VGF ceiling than the central scheme’s 30 per cent cap, reflecting Karnataka’s higher land and evacuation costs.
The March 2026 budget also announced complementary measures: a ₹500 crore allocation for grid strengthening in high‑renewable‑penetration zones, a dedicated green energy corridor for the northern Karnataka solar belt, and a pilot programme for 500 MWh of battery energy storage systems (BESS) to be co‑located with new solar plants. These enablers are critical, as Karnataka’s daytime solar generation has already begun to create “duck curve” dynamics, with midday surplus and evening ramp requirements that challenge grid stability.
Karnataka’s renewable energy journey has been marked by early leadership — the state commissioned India’s first utility‑scale solar park at Pavagada (2,050 MW) in 2018 — but has faced headwinds in recent years. Land acquisition delays, transmission constraints, and payment delays by escoms have slowed new capacity additions. As of December 2025, the state had added only 1.2 GW of solar in the preceding 12 months, well below the 3 GW annual run‑rate needed to meet its 2030 targets. The Mukya Mantri Soura Shakti scheme, with its emphasis on decentralised, smaller‑scale projects that bypass the need for large contiguous land parcels, is explicitly designed to circumvent these bottlenecks.
Analysis: The tender’s structure — particularly the reverse auction on tariff with VGF support — mirrors the competitive bidding framework that has driven India’s solar tariffs to historic lows, with recent SECI auctions discovering tariffs in the ₹2.40‑2.60 per unit range. However, the decentralised nature of Component‑A projects, typically 1‑10 MW each, entails higher per‑MW balance‑of‑system costs than large parks, which may result in discovered tariffs in the ₹2.80‑3.20 range. Bescom’s willingness to accept this premium reflects the locational value of distributed generation in reducing transmission losses and deferring distribution network upgrades.
What to watch next
Several milestones will determine the scheme’s trajectory over the coming months. The technical evaluation outcome, expected by late May 2026, will reveal the depth of developer interest and the competitiveness of discovered tariffs. Industry observers note that the 30 April submission deadline leaves a narrow window for site due diligence, particularly for bidders without pre‑identified land parcels. The effectiveness of KREDL’s single‑window clearance will be tested in real time; any delays in land conversion certificates or evacuation approvals could push commissioning beyond the 12‑month target.
Grid readiness is a parallel concern. Bescom’s distribution network in the target districts — primarily Kolar, Chikkaballapur, Tumakuru, and Ramanagara — has seen limited augmentation since the last major capital expenditure cycle in 2021‑22. The ₹500 crore grid‑strengthening allocation announced in the budget must translate into timely transformer upgrades, feeder bifurcation, and advanced distribution management system (ADMS) deployment to absorb intermittent generation without voltage excursions.
Payment security will be closely watched by developers and lenders. Karnataka’s escoms have historically accumulated significant arrears to renewable generators, with overdue payments exceeding ₹4,000 crore as of September 2025. The tender document references a payment security mechanism involving a letter of credit (LC) backed by a state government guarantee, but the operational details — LC replenishment timelines, dispute resolution, and guarantee invocation procedures — remain to be finalised in the PPA template. Clarity on these terms before the reverse auction will influence bidder confidence and tariff aggressiveness.
The BESS pilot programme, if synchronised with the first batch of Soura Shakti projects, could provide valuable data on the value stacking of storage — peak shaving, frequency regulation, and ramp management — in Karnataka’s specific grid context. The central government’s recent viability gap funding scheme for BESS (₹3,760 crore for 4,00
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Story synopsis gathered from: The Hindu – National — source
