Council on Energy, Environment and Water Integrated | International | Independent
Open access has historically offered Indian commercial and industrial (C&I) consumers a cost-effective route to directly procure renewable energy (RE). As of 2025, RE procurement by C&I consumers is more than 30 GW. It has grown at a CAGR of 22 per cent between 2020 (1.5 GW/annum) and 2024 (4.5 GW/annum) and is expected to grow to 10 GW/annum in 2030, potentially creating an INR 2-2.5 trillion market.
States such as Karnataka, Maharashtra, Tamil Nadu, Gujarat, and Uttar Pradesh have seen rapid growth in renewable energy open access capacity. Captive and third-party transactions delivered 20–30 per cent savings compared to grid tariffs, especially under group captive models.
This is the second part of a four-part blog series exploring India’s evolving power tariff landscape (read Part 1 here, Part 3 here, and Part 4 here). This installment reflects on how corporates can integrate low-carbon technologies and stay competitive in India's evolving policy and regulatory landscape
Companies now face a conundrum: should they continue to invest in direct RE procurement through open access, or rely more on RE supplied via distribution companies (DISCOMs)? As the government and regulators roll out significant tariff reforms across leading states such as Karnataka, Maharashtra, and Gujarat, corporations must navigate new rules around revised tariff structure, banking, and time-of-day (ToD) pricing (see blog 1).
At the same time, companies must comply with global and domestic decarbonisation drivers such as Environmental, Social and Governance (ESG) mandates, EU’s Carbon Border Adjustment Mechanism (CBAM), Science Based Targets (SBTi), RE100, and India's Carbon Credit Trading Scheme. To remain competitive and compliant, corporations must now build not just renewable capacity but also operational agility to navigate the evolving policy and market landscape.
Cost-reflective tariffs by eliminating cross-subsidy at the average cost of supply (ACoS) level: As covered before, several states have initiated steps to shift to cost-reflective tariff structures at the ACoS level. Karnataka, for instance, plans to nearly eliminate cross-subsidies for C&I categories by FY 2028 at an ACoS level (Table 1). However, as the Cross Subsidy Surcharge (CSS) is computed at the voltage level, there is a marginal decrease in CSS for C&I consumers. While this is a win for transparency and long-term tariff visibility, it has unexpected consequences: the cost delta between discom tariffs and green energy open access prices narrows, marginally eroding the financial incentive to shift to open access-based renewable energy.
Achieving a balanced electricity tariff structure through greater fixed costs recovery: Karnataka, Maharashtra, and Rajasthan are leading this effort, aiming to match revenue recovery with actual cost structures. The Karnataka Electricity Regulatory Commission has increased fixed charges and reduced energy charges in the tariff (Figure 1 and Table 2). While this improves the discoms' financial health, it reduces the benefit for consumers who manage their energy load efficiently or rely on green energy open access, particularly because savings are now harder to realise when energy charges are reduced and fixed charges are increased.
Aligning electricity tariffs with granular time block costs: States like Gujarat, Maharashtra, and Madhya Pradesh align ToD tariffs with solar generation hours to reflect real-time system costs better. For example, Maharashtra's seasonal ToD design offers 20–30 per cent discounts during solar hours and 25 per cent surcharges during evening peaks. While this encourages load-shifting, it also complicates open access planning. Consumers must choose between cheaper discom power during solar hours or green energy contracts to manage demand.
The golden age of green energy open access savings may end as Maharashtra has further tightened the banking provisions, with surplus RE adjustment allowed only in similar ToD slots. Earlier, the energy banked was allowed settlement in most of the time slots (except the peak slot). Now, energy banked during solar hours ToD slot (09:00 – 17:00) may be drawn in the same TOD slot, rendering the banking facility of no economic use or a ‘no banking scenario’. Forecasting errors can now dent RE developers' returns and erode consumer savings. Add the complexity of seasonal ToD pricing, and it is clear that green procurement is no longer plug-and-play. However, with sharper price differentials between peak and non-peak hours, the opportunity for battery energy storage systems (BESS) becomes more financially viable. The regulatory clarity on technical connectivity for the BESS system is in the nascent stages and is being drafted in states like Tamil Nadu.
For large C&I players, think of steel plants or cement manufacturers. These players have the most flexibility. The challenge for them is no longer supply, it's portfolio management. They should explore wind/solar and battery hybrid models to meet 80 per cent of their electricity requirements through RE. The final 20 per cent stretch will be very costly. The average per unit cost of sourcing 24/7 renewables, according to recent assessments, will cost INR 9.5/kWh for steel industries. Further, cost optimisation can come through BESS revenue stacking (peak arbitrage, ancillary services, DG backup replacement) as the market develops in India. Companies should also explore the emerging options such as Contract for Differences (CFDs), virtual power purchase agreements (VPPAs), and Electricity Derivatives.
Smaller C&I consumers, like commercial complexes or mid-sized factories, face the most disruption. Often left out of open access, their best bet is DISCOM-integrated rooftop solar schemes or participating in aggregator-led green offerings. Digital tools and automation can help align loads with cheaper ToD windows.
What is the way forward for C&I clean energy procurement?
As electricity tariffs evolve to reflect real system costs, so must corporate consumers' mindsets. Tariff reforms are not barriers; they're signals to integrate storage, diversify procurement, and think not just in terms of savings but resilience.
In a future where carbon is priced, emissions are tracked, and energy is intelligently scheduled, the winners will be those who build not just capacity but capability—to manage complexity and seize incentives.
Prateek Aggarwal is a Programme Lead and Disha Agarwal is a Senior Programme Lead at the Council on Energy, Environment and Water (CEEW), New Delhi. Send your comments to prateek.aggarwal@ceew.in
