The State of Karnataka is located in the southern region of India with installed electricity generation capacity of 13,596 MW (As on 31st January 2013). Karnataka constitutes 6% of the total installed electricity generation capacity of India which is mainly from fossil fuels such as coal and natural gas. The private sector has a 35% share in the total installed capacity, implying a healthy investment environment. Renewable power forms 24% of the total installed capacity.
Institutional structure of the power sector in Karnataka
In order to improve the performance of the power sector in the state, the Karnataka Legislature (Government of Karnataka) passed the Karnataka Electricity Reforms Act (KERA) in 1999. It mandated unbundling of the Karnataka Electricity Board (KEB). Therefore, the government of Karnataka formed four new independent distribution companies in year 2002. These are Bangalore Electricity Supply Company (BESC), Mangalore Electricity Supply Company (MESC), Hubli Electricity Supply Company (HESC) and Gulbarga Electricity Supply Company (GESC). In the year 2005, Chamundeshwari Electricity Supply Corporation Limited (CESC) carved out of MESCOM and is managing distribution of electric power for the five districts. CESC is functional from the year 2005 having its headquarters at Mysore. Karnataka Electricity Regulatory Commission (KERC) forms regulations in the state and also look after all other regulatory matters related to electricity generation, transmission and distribution. Karnataka Power Transmission Corporation Limited (KPTCL) incorporated in year 1999 and wholly owned by the Government of Karnataka. KPTCL is engaged in power transmission in the State of Karnataka and also constructs transmission lines. The schematic below shows the Karnataka Institutional structure of Power Sector;
Power Demand- Supply Position of Karnataka
Karnataka has been facing both peak and energy deficits over the last few years. Peak demand deficit in the state has increased from 5% in FY 2005-06 to 19% in 2011-12. Between 2005-06 and 2011-12, peak electricity demand grew at a compound annual growth rate (CAGR) of 9%, while peak demand met at CAGR of 6%. The peak demand- peak met deficit grew at CAGR of 20% over the last 8 years. (See graph below)
Electricity deficit in the state has increased from 4% in 2005-06 to 11% in 2011-12 (CAGR =15% over eight years). The reason for the increasing deficits can be mainly traced to the inability of the state to increase electricity generation. Between 2005-06 and 2011-12, electricity requirement grew at a compound annual growth rate (CAGR) of 8%, while availability only grew at around 7% leading to increasing electricity deficits. (See graph below).
Based on the data (graphs), the electricity availability against the demand is low and the deficit is increasing in each year. It is expected that the power deficit post 2012 will continue to increase as the demand for power is continuously surpassing supply. Increasing coal supply shortages and unfavourable climatic conditions resulting in reduced water levels have been the main causes of energy deficits.
Position of Renewable energy in Karnataka
The state government has provided financial support of Rs. 10,289 Cr  for power sector mainly for coal-based capacity. However projects based on coal are expected to get delayed due to environmental concerns and coal shortages. To overcome this, the state government is aggressively exploring accelerated capacity addition of renewable projects in the state.
The Karnataka Renewable Energy Development Limited (KREDL) is an organization working to promote renewable energy in the state. It operates under Energy Department, Government of Karnataka. The Karnataka Renewable Energy Policy was announced by KREDL for the period of 2009-14. This policy aims at adding 1000 MW capacity each year from renewable energy resources.
Currently (By Jan 2013) the state of Karnataka has total installed capacity of 3,599 MW for small hydro and 3,385 MW of installed capacity for renewable energy sources like Wind, Solar and Biomass.
The state of Karnataka is taking considerable steps to solve the issue of electricity shortage through increasing use of renewable energy. It includes the Karnataka Solar Policy which targets capacity addition of 200 MW by 2015-16. In addition to this, the State also supports Renewable Energy Certificate (REC) mechanism under renewable energy project developer can commercialize the green component of the electricity generated from its renewable energy projects. State Electricity Distribution Companies and other big electricity consumers have Renewable Purchase Obligations (RPO). RPO comes under The KERC (Power Procurement from Renewable Sources by Distribution Licensee and Renewable Energy Certificate Framework) Regulations, 2011. It mandates a particular category of consumers to purchase part of their electricity from Renewable Energy sources or they can buy REC generated from registered renewable energy project to fulfil their RPO.
All these measures will help to reduce the burden on conventional energy that uses fossil fuels. With decreasing cost of generation from renewable energy sources and the advancement in renewable energy technologies, the state as well as the country can reduce reliance on fossil fuels.
Reference: All the quantitative data is sourced from Central Electricity Authority (CEA) website.
 In order to reduce the demand-supply gap, Government of Karnataka has taken initiatives to improve the generation capacity of the state. The government through its state annual budget 2012-13 has provided an outlay of 10,289 crore INR for the sector. (PWC report, CII Karnataka Conference on Power 2012)