Electricity Tariff Reforms Are Reshaping India's Power Market Landscape

Electricity Tariff Reforms Are Reshaping India's Power Market Landscape

September 19, 2025

Recent reforms in tariff mechanisms across different states in India have been changing the economics of procuring power for C&I users, potentially diluting the financial benefits of open-access models in renewable energy, and, by extension, forcing companies to rethink how they source and manage electricity.

Till 2025, more than 30 GW of RE was procured by C&I entities through open access-a route that gained popularity due to offering significant savings compared to grid supply. However, changes in tariff structure include the rollout of cost-reflective tariffs, revisions in fixed versus energy charges, and dynamic time-of-day pricing, which is narrowing the gap between open access RE and traditional supply from distribution companies (DISCOMs).

For example, in states such as the Karnataka Electricity Regulatory Commission, initiatives are afoot to eliminate cross-subsidies for industrial and commercial users over the course of 2028, thereby reducing the aforementioned CSS component that made open access so attractive in the first place. Meanwhile, regulators have increased fixed charges and lowered variable energy charges ; a shift that benefits the revenue models of DISCOMs but diminishes the incentive for firms looking to optimize energy use or relying on renewable open access.

Moreover, the TOD Tariff Designs in states such as Maharashtra Electricity Regulatory Commission have introduced discounts during solar generation hours and surcharges during peak evening demand. Although this does encourage consumption timing to match cheaper grid power, it also complicates open-access planning and undermines the simplicity of RE procurement for companies.