Karnataka is well placed to meet its energy needs over the next decade thanks to its rapid deployment of renewables as part of India’s ambitious decarbonisation programme, which aims to reduce emissions while meeting energy demand and supporting economic growth.

At the end of 2019, Karnataka’s solar capacity stood at 7.3GW, the highest of any state in India and almost 22% of the total deployed in the country. Overall, the state accounts for 22% (15GW) of India’s total installed capacity. These achievements have helped put India on track to meet its carbon reduction targets agreed under the Paris accord in 2015.

However, capacity additions alone will not be sufficient to develop an economically efficient power system that reduces carbon emissions at low costs. Like the rest of the country and its neighbouring state, Tamil Nadu, Karnataka is at a critical inflection point with respect to the electricity market design and the structure of the electricity industry.

Previous analysis for the Energy Transitions Commission showed that for generic electricity systems as well as for India when taken as a whole, the total cost of a low carbon electricity system would be lower than the cost of the current energy mix, including all system and integration costs. However, this analysis also suggested that these benefits could only be achieved if market mechanisms and other measures could increase the flexibility of both supply and demand of electricity to adapt to changing demand patterns and the variability of renewable energy supply.

This analysis also indicated the importance of local and regional differences in the demand and supply for flexibility and the need to evaluate options and plans at state level to understand fully the costs, potential, and issues that may arise. This case study is one of a series of regional and national studies in India that addresses key elements of electricity market reforms and technology development that are central to the ability of Karnataka, and India as a whole, in meeting this challenge. See our case study for Tamil Nadu here.