High Solar Open Access Charges Impede Third-Party Mode Preferred by Small C&I Units

Captive and group captive models drive the growth of open access in these states


Karnataka, Maharashtra, and Tamil Nadu emerged as the top states for solar open access installations in 2022, according to the 2022 Q4 & Annual Mercom India Solar Open Access Market Report.

However, the growth was mainly driven by captive and group captive models. The third-party open access model has failed to take off in these states because of the high open access charges, which include cross-subsidy surcharge and additional surcharge.

High landed costs in these states have been detrimental to the growth of third-party open access projects, adversely affecting smaller entities that need more cash reserves to opt for captive or group captive methods.

In Karnataka, the cross-subsidy surcharge for industrial consumers was in the range of ₹1.95 (~$0.024)/kWh to ₹2.08 (~$0.025)/kWh for FY 2023. For commercial consumers, the cross-subsidy charge was in the range of ₹2.59 (~$0.032)/kWh to ₹2.75 (~$0.034)/kWh.

The additional surcharge for all commercial and industrial consumers currently stood at ₹2.15 (~$0.026/kWh. Bangalore Electricity Supply Company (BESCOM) increased the additional surcharge by nearly 103% from ₹1.06 (~$0.013)/kWh in FY 2022 to ₹2.15 (~$0.026)/kWh in FY 2023

Karnataka led the states in terms of open access installations in 2022. Maharashtra had the second-highest open access solar capacity additions, followed by Tamil Nadu.

In terms of cumulative installations as of December 2022, Karnataka remained the top state, followed by Maharashtra and Tamil Nadu.

In January this year, power distribution companies of Karnataka proposed revised tariffs for low-tension (LT) and high-tension (HT) consumers, which include grid support charges for captive open access power consumers. Apart from other open access charges, consumers will now have to pay an additional grid-support charge in the range of ₹1.57 (~$0.019)/kWh to ₹2.85 (~$0.035)/kWh, which many believe will be detrimental to the growth of captive open access power projects in the state.

The story for Maharashtra and Tamil Nadu are identical.

The cross-subsidy surcharge for industrial consumers in Maharashtra varied from ₹1.68 (~$0.021)/kWh to ₹2.26 (~$0.028)/kWh, and for commercial consumers, the cross-subsidy surcharge was in the range of ₹2.61 (~$0.032)/kWh to ₹2.88 (~$0.035)/kWh. Also, the additional surcharge in Maharashtra stood at ₹1.27 (~$0.015)/kWh for FY 2023.

Similarly, in Tamil  Nadu, the cross-subsidy surcharge for commercial consumers was hiked by 17.7% to ₹2.33 (~$0.028)/kWh and by 7.2% for industrial consumers to ₹1.79 (~$0.022)/kWh. The additional surcharge for FY 2023 stood at ₹0.7 (~$0.009)/kWh.

While these states have been doing well in terms of open access installations, they should also focus on third-party open access to provide a viable alternative to C&I customers and promote the growth of open access in the states.