Maharashtra Electricity Regulatory Commission amended open access rules in Q4 2024.
Your existing 15MW open access solar PPA might be non-compliant by April 2025.
Your choices: Renegotiate the PPA, pay penalty charges, or convert to captive.
Your CFO has 90 days to decide.
What changed in the regulations
Old rules (pre-2024):
- Open access threshold: 1 MW minimum
- Cross-subsidy surcharge: Fixed at ₹1.50-2.00/kWh
- Wheeling charges: ₹0.80-1.20/kWh depending on voltage level
- Banking allowed: 100% banking with no limit
- Contract duration: 25 years allowed
New rules (2025 onwards):
- Open access threshold: Reduced to 500 kW in some states
- Cross-subsidy surcharge: Variable by consumer category + time-of-day
- Wheeling charges: Increased to ₹1.20-1.80/kWh (infrastructure cost recovery)
- Banking: Limited to 90% with monthly settlement
- Contract duration: 20 years maximum (new PPAs)
If you signed a 25-year PPA in 2023: Your contract grandfathering depends on state commission rules. Some states force renegotiation.
The cross-subsidy surcharge problem
What cross-subsidy surcharge actually means:
Industrial consumers pay higher tariffs to subsidize agriculture/residential. When you buy power via open access at cheaper rates, you don't pay into the subsidy pool.
State commissions charge you anyway = Cross-subsidy surcharge.
Old calculation (simple):
- CSS = ₹1.80/kWh (fixed for all industrial consumers)
- Your grid tariff: ₹7.00/kWh
- Your open access PPA: ₹4.00/kWh
- Total cost: ₹4.00 + ₹1.80 = ₹5.80/kWh
- Savings: ₹1.20/kWh
New calculation (complex):
- CSS = (Grid tariff - Average cost of supply) × Subsidy factor × Time-of-day multiplier
- Your grid tariff: ₹7.00/kWh
- Average cost of supply: ₹5.20/kWh
- Subsidy factor: 1.2 (HT industrial category)
- Time-of-day multiplier: 1.3 (peak hours 6-10 PM)
- CSS = (₹7.00 - ₹5.20) × 1.2 × 1.3 = ₹2.81/kWh during peak
Your open access PPA cost just became: ₹4.00 + ₹2.81 = ₹6.81/kWh during peak hours.
Savings dropped from ₹1.20/kWh to ₹0.19/kWh. That's 84% reduction in savings.
Time-of-day (ToD) tariff impact
New ToD structure for open access:
- Off-peak (12 AM - 6 AM): CSS × 0.7
- Normal hours (6 AM - 6 PM): CSS × 1.0
- Peak hours (6 PM - 10 PM): CSS × 1.3
- Super-peak (10 PM - 12 AM): CSS × 1.1
Your solar PPA generates during 6 AM - 6 PM.
This means:
- Peak consumption (6-10 PM): Buying from grid at full CSS
- Solar generation hours: Paying base CSS
- Net result: Higher effective cost
If you don't have battery storage, your evening consumption kills your economics.
Banking rule changes
Old banking (generous):
- Inject 1,000 kWh during day
- Withdraw 1,000 kWh during night
- 100% carry-forward month to month
- Annual settlement at end of year
New banking (restricted):
- Inject 1,000 kWh during day
- Withdraw 900 kWh during night (10% loss)
- Monthly settlement only
- Unused credits expire monthly (no carry-forward)
Impact on solar-only PPAs:
- Old system: Banking smoothed out seasonal variations
- New system: Lose 10-15% of solar generation value
Example:
- Annual solar generation: 50,000 MWh
- Old banking: Utilized 48,000 MWh (96% utilization)
- New banking: Utilized 43,000 MWh (86% utilization)
- Lost value: 5,000 MWh × ₹4/kWh = ₹2 crore per year
This alone destroys the business case for many solar PPAs.
The captive vs open access decision
Your existing PPA structure matters:
If you have an open access PPA:
- Third-party generator sells you power
- You pay CSS + wheeling + transmission charges
- New rules increase these charges
- Your effective cost just increased 20-30%
If you convert to captive:
- You own 26%+ of the solar plant (or your group company does)
- No CSS charges
- Still pay wheeling + transmission
- But CSS savings = ₹1.80-2.80/kWh
Captive conversion requirements:
- Equity ownership: 26% minimum
- Dedicated transmission line OR open access network
- State-specific regulations vary
- Cross-state captive needs CERC approval
Financial impact of conversion:
50MW solar plant, 15-year remaining PPA:
- Open access cost: ₹4.00/kWh + ₹2.50/kWh (CSS + wheeling) = ₹6.50/kWh
- Captive cost: ₹4.00/kWh + ₹1.00/kWh (wheeling only) = ₹5.00/kWh
- Annual consumption: 150 million kWh
- Annual savings: ₹22.5 crore
Captive conversion cost: ₹8-12 crore (restructuring + transmission upgrades).
Payback: 4-6 months.
State-by-state variations
Maharashtra:
- CSS: ₹2.10-2.80/kWh (HT industrial)
- Wheeling: ₹1.50/kWh
- Banking: 90% with monthly settlement
- ToD multipliers: 0.7-1.3×
Gujarat:
- CSS: ₹1.80-2.40/kWh
- Wheeling: ₹1.20/kWh
- Banking: 100% within month, no carry-forward
- ToD multipliers: 0.8-1.2×
Odisha:
- CSS: ₹1.50-2.20/kWh
- Wheeling: ₹1.00/kWh
- Banking: 95% within month
- ToD multipliers: Not yet implemented
Karnataka:
- CSS: ₹2.50-3.20/kWh (highest in India)
- Wheeling: ₹1.40/kWh
- Banking: 85% with monthly settlement
- ToD multipliers: 0.75-1.4×
If you have multi-state operations: Each state treats open access differently. Your CFO needs state-specific analysis.
Group captive complications
If you're setting up group captive:
Old rules allowed loose definition of "group":
- Sister companies under common holding
- SPV structures
- Cross-holdings > 26%
New rules tightened definitions:
- Direct equity ownership required
- SPV structures under scrutiny
- Beneficial ownership tests applied
- Transfer pricing regulations apply
What this means:
- Your existing group captive structure might need restructuring
- Tax implications of ownership transfers
- Increased compliance reporting
- State-by-state approval processes
Cost of restructuring: ₹50 lakh - ₹2 crore in legal/regulatory work.
Contract renegotiation strategies
If your PPA was signed pre-2024:
- Check grandfathering clauses: Some states protect existing contracts for 5-10 years
- Force majeure provisions: Regulatory change = renegotiation trigger?
- Change-in-law clauses: Who bears the cost of new regulations?
- Exit options: Early termination penalties vs ongoing increased costs
Your developer's response:
- "Regulatory changes are pass-through costs" (you pay)
- "Fixed PPA price doesn't include CSS/wheeling" (you pay)
- "Convert to captive at your cost" (you pay)
Your leverage:
- Threaten early termination (if contract allows)
- Demand co-investment in battery storage (fixes ToD problem)
- Restructure as captive (developer reduces ownership to 74%)
Typical renegotiation outcomes:
- PPA price increase: ₹0.30-0.60/kWh
- Developer funds battery storage (cost-sharing)
- Conversion to captive structure (ownership transfer)
- Hybrid model (partial captive, partial open access)
Battery storage as the solution
Why battery eliminates most regulatory problems:
Without battery:
- Solar generates 6 AM - 6 PM (normal CSS rates)
- Peak consumption 6 PM - 10 PM (1.3× CSS rates)
- Banking losses 10%
- Effective cost: High
With battery:
- Solar charges battery during day
- Battery discharges during peak evening hours
- Zero banking needed (self-consume immediately)
- Effective cost: 20-30% lower
Battery economics:
- 50MWh storage: ₹20-25 crore
- Avoided CSS during peak: ₹1.80-2.50/kWh
- Annual savings: ₹8-12 crore
- Payback: 2-3 years
This is why every open access solar PPA should now include battery storage.
Compliance deadlines
Q1 2025 (now - March 2025):
- Review existing PPAs for compliance
- Assess impact of new CSS calculations
- Model battery storage economics
- Initiate captive conversion studies if beneficial
Q2 2025 (April - June):
- Submit revised open access applications (if required)
- Complete captive ownership restructuring
- Install battery storage (if proceeding)
- Finalize renegotiated PPAs
Q3 2025 (July - September):
- First monthly settlement under new banking rules
- Measure actual CSS impact vs projections
- Adjust consumption patterns based on ToD rates
Penalty for non-compliance:
- Deemed open access violations: ₹10-20 lakh per incident
- Forced disconnection of renewable source
- Retroactive CSS charges + 18% interest
- Disqualification from future open access for 2 years
What your CFO needs to do this quarter
Immediate actions (next 30 days):
- Get updated CSS calculations: Contact DISCOM for your category
- Model ToD impact: When do you consume vs when solar generates?
- Calculate banking losses: What's the actual monthly settlement impact?
- Review PPA contracts: Grandfathering, change-in-law, exit clauses
- Assess captive conversion: Ownership restructuring cost vs CSS savings
Financial analysis required:
- Current PPA cost: ₹___/kWh
- Add new CSS: ₹___/kWh
- Add new wheeling: ₹___/kWh
- Add ToD impact: ₹___/kWh
- Add banking losses: ₹___/kWh
- New effective cost: ₹___/kWh
Compare to:
- Grid tariff: ₹___/kWh
- Captive cost: ₹___/kWh
- Captive + battery cost: ₹___/kWh
Decision tree:
- If new open access cost > grid tariff: Terminate PPA, buy from grid
- If new open access cost > captive cost: Convert to captive
- If savings < 10%: Add battery storage to improve economics
- If captive not possible: Renegotiate PPA with developer
What we're doing different
Our PPAs are captive-by-default:
- Customer owns 26%+ equity from day one
- No CSS charges
- No regulatory risk from open access rule changes
- Battery storage included in design
Structure:
- Special purpose vehicle (SPV) owns solar + battery asset
- Your company owns 26% of SPV (captive ownership)
- Ziani owns 74%, operates asset, provides guarantees
- Off-balance-sheet financing (debt at SPV level)
Benefits:
- ₹1.80-2.80/kWh CSS savings (vs open access)
- No regulatory risk (captive rules stable)
- Battery included (fixes ToD problem)
- Zero upfront capital (we fund your 26% ownership)
Your effective cost:
- Base solar PPA: ₹3.60/kWh
- Wheeling: ₹1.00/kWh
- Battery (included): ₹0/kWh
- CSS: ₹0/kWh (captive exemption)
- Total: ₹4.60/kWh locked for 25 years
The bottom line
Open access regulations changed. Your PPA economics changed with them.
Industrial buyers who signed PPAs in 2022-2023 are seeing effective costs increase 20-30% due to:
- Higher CSS charges
- ToD tariff multipliers
- Banking restrictions
- Increased wheeling charges
Your options:
- Accept higher costs (do nothing)
- Renegotiate PPA with developer
- Convert to captive (if economical)
- Add battery storage (fixes ToD problem)
- Terminate PPA and buy from grid (if savings eliminated)
Or build captive from the start:
- No CSS charges
- Regulatory stability
- Lower long-term cost
- Battery included
We handle the compliance complexity. You lock in ₹4.60/kWh for 25 years.