Gujarat’s power regulator has cut the banking charge for green energy open access consumers by one-third to ₹1 per kWh for the seven-month window starting September 2026, while introducing a first-of-its-kind annual formula from April 2027 that will tie charges directly to the net revenue impact on distribution utilities – a move that immediately improves project economics for corporate buyers and signals a structural shift in how India’s most solar-rich industrial state values time-shifting renewable generation.
Why banking charges matter in Gujarat’s open access market
Banking allows open access consumers to “deposit” surplus renewable generation with the grid during high-production hours – typically midday solar peaks – and withdraw an equivalent amount later, usually during evening peaks when their own demand is higher. The banking charge is the fee the distribution company (DISCOM) levies for this time-shifting service, distinct from wheeling charges, cross-subsidy surcharges, or additional surcharges. Until June 2025, GERC had fixed this charge at ₹1.50/kWh under the state’s Green Energy Open Access Regulations. The new ₹1/kWh rate applies from September 1, 2026 through March 31, 2027, after which a formula-based annual determination takes over.
Gujarat’s open access market is among the largest in India, driven by a dense cluster of energy-intensive industries – textiles, chemicals, ceramics, pharmaceuticals – concentrated in corridors like Ahmedabad-Vadodara-Surat and the Kutch renewable energy park zone. The state had roughly 28 GW of installed renewable capacity as of early 2025, with solar alone exceeding 14 GW. A significant share of this capacity serves commercial and industrial (C&I) consumers through third-party power purchase agreements (PPAs) or captive/group-captive structures, making banking economics a direct input to project viability. The ₹0.50/kWh reduction translates to roughly ₹4.4 lakh per MW per year in savings for a typical solar project operating at 19% capacity factor with 50% of generation banked – enough to shift internal rate of return (IRR) by 50-75 basis points for marginal projects.
The regulatory timeline is notable: the reduced rate covers only the second half of FY2026-27. GERC’s order indicates the interim rate bridges the gap until the new methodology – mandated by the Commission’s own 2024 framework – becomes operational. That methodology will calculate the “net revenue impact of banking renewable energy on DISCOMs,” effectively requiring utilities to demonstrate the actual cost (or benefit) of absorbing midday solar and returning it at peak. This moves the charge from a fixed administrative number to a cost-reflective signal, a transition several state regulators have discussed but few have operationalised.
Cross-cutting analysis: the DISCOM revenue paradox and storage competition
The new methodology creates a structural tension. DISCOMs in Gujarat – primarily the four state-owned entities (DGVCL, MGVCL, PGVCL, UGVCL) plus Torrent Power in Ahmedabad/Gandhinagar and Surat – have long argued that banking erodes their peak-hour revenue because open access consumers displace high-tariff grid purchases exactly when the utility’s marginal procurement cost is highest. Conversely, midday solar injections reduce the utility’s need to procure expensive short-term power or run backing-down thermal units. The net revenue impact could be positive, negative, or neutral depending on the utility’s specific load profile, procurement mix, and contracted capacity payments.
If the formula genuinely captures both sides – avoided midday procurement costs versus lost evening revenue – the resulting charge could settle well below ₹1/kWh for utilities with high solar penetration and daytime industrial load, or rise above ₹1.50/kWh for those with pronounced evening peaks and limited flexible generation. My approximate estimate, based on typical Gujarat DISCOM load curves and current power exchange prices, suggests the net impact likely falls in the ₹0.60-0.90/kWh range for most circles, implying the ₹1/kWh interim rate may already be slightly conservative.
This development coincides with a parallel trend: the rapid deployment of behind-the-meter and front-of-meter battery storage by C&I consumers seeking to avoid banking charges altogether. A 1 MWh battery system paired with a 1 MW solar plant can shift roughly 3-4 MWh daily from midday to evening, eliminating banking needs for that portion of generation. At current battery-plus-solar levelised costs of approximately ₹4.50-5.00/kWh for the shifted energy (versus grid peak tariffs of ₹7-9/kWh for HT industrial consumers), storage is increasingly competitive with grid banking – especially once the post-2027 charge becomes uncertain. The GERC move effectively buys time for the banking model, but the long-term trajectory favors storage integration where land and capital permit.
By comparison, Maharashtra’s MERC allows banking at 100% credit with no explicit banking charge but imposes strict time-of-day restrictions and a 7.5% energy loss deduction. Karnataka charges ₹0.50-0.70/kWh depending on voltage level but caps banking at 20% of contracted capacity. Rajasthan, another major open access market, has no banking facility for solar – only wind – forcing developers toward storage or hybrid configurations. Gujarat’s formula-based approach, if executed transparently, could become the template for cost-reflective banking pricing across states.
Who this affects
- C&I procurement heads: The ₹0.50/kWh reduction improves the landed cost of green open access power by 3-5% for typical solar PPAs, strengthening the business case against captive coal or grid thermal power; model the post-2027 formula risk into long-term PPA negotiations.
- Solar and hybrid project developers: Banking charge certainty for H2 FY27 enables cleaner financial closes for projects targeting March 2027 commissioning; factor the formula transition into revenue models for projects with 25-year PPAs extending beyond 2027.
- DISCOM regulatory teams: Prepare granular hourly data on avoided procurement costs, backing-down thermal savings, and peak revenue displacement to feed the new methodology; the first annual filing will set precedent for all subsequent years.
- Storage developers and EPC firms: The interim rate reduction narrows but does not eliminate the arbitrage window for batteries; target C&I clients with evening-heavy load profiles where banking restrictions or future charge uncertainty make storage the lower-risk option.
What to watch next
- GERC’s draft methodology paper (expected Q4 FY26): The specific variables – marginal procurement cost curves, time-of-day loss factors, capacity payment treatment – will determine whether the formula yields stable, predictable charges or introduces annual volatility.
- DISCOM-wise banking utilisation data for FY26: Hourly injection/withdrawal records from the four state DISCOMs and Torrent Power will reveal which circles are net beneficiaries or losers under banking, foreshadowing the formula outputs.
- Central Electricity Regulatory Commission (CERC) stance on inter-state banking: If CERC adopts a similar cost-reflective framework for inter-state green energy open access, Gujarat’s methodology could become the de facto national benchmark.
- C&I storage adoption rate in Gujarat (track via CEA monthly reports): A sustained uptick in behind-the-meter battery registrations above 200 MWh/quarter would signal that buyers are hedging against post-2027 banking uncertainty.
Bottom line
Gujarat has replaced a static banking fee with a transitional discount and a promised cost-reflective formula – a pragmatic compromise that acknowledges DISCOM revenue concerns while keeping green open access viable in the near term. The real test arrives in April 2027: if the methodology produces transparent, utility-specific charges that reflect actual grid economics, it could resolve the banking-versus-storage debate by pricing time-shifting at its true system value. If it becomes a vehicle for DISCOMs to recoup stranded costs, open access developers will accelerate the shift to hybrid solar-storage configurations, fundamentally altering Gujarat’s renewable procurement landscape.
Read the full report at Mercom India
Note: facts and figures attributed above to Mercom India (Indian solar & clean energy business news) reflect that outlet's original reporting. Broader context, cross-sector connections, and forward-looking scenarios reflect independent analysis by our editorial team.
About this article: Drafted by Energy Ai with AI-assisted research and writing based on public reporting, then reviewed under our editorial process before publication.
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