The share of open access charges in landed solar power costs declined across most major states in the second quarter (Q2) of 2026, following the revision of charges for FY2027, according to Mercom’s Q2 and 1H 2026 India Solar Open Access Market Report.

However, lower open access charges did not translate into lower overall procurement costs for most industrial consumers, as higher power purchase agreement (PPA) tariffs offset the reduction.

Of the 13 states analyzed by Mercom, nine registered a quarter-over-quarter (QoQ) increase in landed open access costs, primarily due to higher PPA tariffs. Tamil Nadu recorded the highest landed cost at ₹8 (~$0.0846)/kWh, increasing by 1.3% QoQ. Karnataka, Maharashtra, and Madhya Pradesh followed, with landed costs exceeding ₹7 (~$0.074)/kWh and quarterly increases ranging from ₹0.01-₹0.05 (~$0.000106-$0.00053)/kWh.

Gujarat was the only state to record a decline, following a 24% reduction in the additional surcharge.

Higher PPA Tariffs Drive Landed Costs

PPA tariffs emerged as a key driver of landed open access costs during Q2 2026. Across the states analyzed, PPA tariffs ranged from ₹3to ₹5 (~$0.0317 to ~$0.0528)/kWh. Maharashtra and Tamil Nadu recorded the highest tariffs, while Haryana and Odisha recorded the lowest.

Average PPA tariffs increased across several major states during the quarter. Maharashtra recorded the highest QoQ increase of 2.6%, followed by Tamil Nadu at 2.5%. Tariffs increased by more than 2% in Uttar Pradesh and Karnataka and by more than 1% in Chhattisgarh and Rajasthan. Andhra Pradesh recorded a marginal increase, while tariffs remained largely stable in the other states analyzed.

Higher module procurement costs were among the factors putting upward pressure on PPA tariffs. The implementation of the Approved List of Models and Manufacturers (ALMM) List-II mandating the use of domestically made solar cells from June 1, 2026, had raised concerns over cell availability and procurement costs ahead of the deadline.

Changes in banking provisions, time-of-day settlement, and energy accounting are also altering the economics of standalone solar projects. These changes are increasing interest in hybrid and storage-backed projects that can provide firmer and better-aligned power supply, although such projects typically carry higher tariffs.

Open Access Charges Drop

In contrast to PPA tariffs, the share of open access charges in total landed costs declined across most states during Q2 2026. The reduction was largely driven by revised tariffs and open access charges for FY 2027.

Gujarat recorded the largest decline, with the share of open access charges falling to 38%, following a reduction in the additional surcharge. The share of open access charges also declined in Uttar Pradesh, Chhattisgarh, Andhra Pradesh, Rajasthan, Karnataka, Maharashtra, and Tamil Nadu.

Despite the overall decline, open access charges continued to vary significantly across states, accounting for approximately 25% to 52% of landed costs. Haryana had the highest share at around 52%, indicating that network and regulatory charges accounted for more than half of its landed cost. Uttar Pradesh had the lowest share at around one-fourth of the landed open access cost, declining a further 1.3% from the previous quarter.  Chhattisgarh and Telangana were also among the states with relatively lower charge shares.

The variation demonstrates why landed costs cannot be assessed based on PPA tariffs or open access charges independently. States with broadly similar landed costs can have significantly different cost structures. Haryana and Rajasthan, for example, recorded similar landed costs even though open access charges accounted for a substantially larger share of the total in Haryana.

Third-Party Procurement Economics Weaken in Some States  

The impact of higher landed costs becomes clearer when compared with prevailing industrial grid tariffs, which ultimately determine the savings available to open access consumers.

Tamil Nadu recorded the highest third-party landed cost, exceeding the industrial tariff by 3.9%, resulting in negative savings for third-party procurement. Elevated PPA tariffs were the primary contributor to the higher landed cost.

In Maharashtra, the third-party landed cost was marginally lower than the industrial tariff, resulting in savings of around 1%. The absence of an additional surcharge continued to support the economics.

Third-party procurement remained considerably more attractive in Chhattisgarh and Uttar Pradesh. Chhattisgarh offered savings of around 26.4% compared with the industrial tariff, while Uttar Pradesh provided savings of approximately 17.4%.

Odisha also recorded a relatively low third-party landed cost. However, consumers still faced negative savings because the state’s industrial grid tariff was comparatively low. This illustrates an important distinction in open access economics: a low landed procurement cost does not necessarily translate into attractive savings. The economics ultimately depend on the spread between the landed open access cost and the grid tariff that the consumer would otherwise pay.

Captive and Group captive Procurement Retain Clear Cost Advantage

Captive and group captive procurement remained more economical than third-party procurement across all states analyzed.

Savings under captive and group captive procurement reached ₹3.74 (~$0.040)/kWh in Chhattisgarh. The state recorded the highest savings under both procurement models among the markets analyzed, with economics also improving significantly compared to the previous quarter.

The cost advantage of captive and group captive projects is primarily supported by exemptions from cross-subsidy surcharge and additional surcharge, where applicable. These exemptions allow captive procurement to retain meaningful savings even in states where third-party open access provides limited or negative savings.

In Uttar Pradesh, group captive procurement offered around 84% higher savings compared with third-party procurement.

The widening difference between third-party and captive procurement also highlights the importance of state-level regulatory structures. As PPA tariffs rise, exemptions from major open access surcharges can provide captive and group captive structures with greater resilience against increases in landed costs. However, consumers must weigh these savings against the ownership, equity participation, consumption, and compliance requirements associated with captive structures.

The results also highlight the importance of evaluating open access economics on a state-by-state and procurement-model basis. A lower landed cost does not necessarily mean greater savings if grid tariffs are also low, while higher-cost states can still offer attractive economics where conventional industrial tariffs are sufficiently high.

For C&I consumers, the relevant comparison is therefore not simply which state has the lowest PPA tariff or open access charges, but the resulting landed cost relative to the applicable grid tariff and the savings available under third-party, captive, and group captive structures.

Despite the pressure on landed costs, demand for solar open access remained strong. Installations reached a record high during Q2 2026, indicating that procurement decisions are being driven by factors beyond immediate per-unit savings. Long-term power cost visibility, sustainability targets, regulatory timelines, and the stronger economics of captive and group captive procurement continue to support demand.

Mercom’s solar open access tracker provides key details of installed and pipeline projects, including captive, group captive, third-party sale, and solar park projects across India.

The Q2 and 1H 2026 India Solar Open Access Market Report covers state-wise open access charges, electricity tariffs, power purchase agreement tariffs, installed and pipeline project capacities, policy updates, and other critical market data.