Open Access In India

This blog explains what open access is, traces its legal evolution, outlines procedures and charges, discusses benefits and challenges, and suggests the way forward. Also, what is Green Open Access, and the Future of Open Access in India - Outlook, Opportunities and Risks

What is Open Access?

Open Access allows eligible electricity consumers and generators to use the transmission and/or distribution network owned by utilities to wheel electricity from a seller (generator or trader) to a buyer (consumer) for a specified period. It effectively decouples supply from the local distribution company (DISCOM), promoting competition, efficiency, and consumer choice.

Types:

• Short-term Open Access: Typically for intra-day/weekly/monthly transactions (often under a year).
• Medium/Long-term Open Access: Contracts for a year or more (commonly for industrial or institutional offtake).
• Renewable Energy (RE) Open Access: For sourcing green power under special regulations and often with RE-specific incentives.

Legal and Regulatory Framework

• Electricity Act, 2003: The cornerstone law that allowed non-discriminatory access to transmission and distribution networks, facilitating open access.
• Central Electricity Regulatory Commission (CERC): Frames regulations for inter-state open access and transmission.
• State Electricity Regulatory Commissions (SERCs): Implement intra-state open access regulations, determine charges like wheeling, cross-subsidy surcharge (CSS), and additional surcharge.
• National Tariff Policy (2006, amended): Encourages open access and balancing of tariffs to reduce cross-subsidies.

Important regulatory elements:

The Electricity Act, 2003 introduced open access in the electricity sector to improve reliability, promote competition among stakeholders and enhance power supply quality by giving buyers and suppliers a choice. Under the Act, consumers with a connected load of 1 megawatt (MW) or more could purchase electricity directly from generators or the open market.

The Act brought in the non-discriminatory use of transmission lines, distribution systems or associated facilities by any licensee or consumer as per the regulations of the appropriate commission. It has helped commercial and industrial (C&I) consumers reduce their electricity costs by sourcing cheaper power. There are no restrictions on the type of power source used in open access purchases.

In August 2022, India revised its Nationally Determined Contributions (NDCs), pledging to achieve net-zero emissions by 2070. It aims to meet half of its total installed capacity from non-fossil fuel energy sources by 2030 and reduce its emissions intensity by 45% relative to its gross domestic product (GDP) by 2030, compared with 2005 levels.

In the build-up to the NDCs announcement and to promote clean electricity generation, purchase and consumption, the Ministry of Power introduced the Green Energy Open Access (GEOA) Rules in June 2022.

The rules address the challenges under the open access framework established by the Electricity Act, 2003, offering a streamlined pathway for renewable energy procurement. The earlier system lacked a structure to facilitate C&I consumer access to renewable energy, resulting in continued reliance on fossil fuel-based grid power. This dependence not only limited consumers’ energy choices but also exposed them to price volatility and supply disruptions. Inconsistent state-level policies and regulatory uncertainties further exacerbated these issues.

Who Can Use Open Access?

• Large industrial and commercial consumers (thresholds set by SERCs).
• Captive power plants and independent generators.
• Power traders and distribution licensees (for bulk transactions).
• Consumers procuring renewable energy (subject to specific terms).

Note: States differ in minimum load requirement and ease of access; some provide preferential pathways for renewable energy.

How Does Open Access Work? (Process Overview)

1. Identify seller and buyer and finalize contract (PPA or short-term agreement).
2. Apply to the relevant transmission/distribution licensee and/or system operator for open access.
3. Obtain connectivity and scheduling approvals; pay application/processing fees and any bank guarantees.
4. Pay applicable charges (wheeling, transmission, losses, congestion if any).
5. Schedule power through the Regional/National Load Dispatch Centre (RLDC/NLDC) or State Load Dispatch Centre (SLDC).
6. Metering, accounting, and settlement performed per regulations (including deviation/imbalance settlement).

Charges & Tariffs (Common Components)

Regulatory regimes set these; amounts and computation vary by state and inter-state norms.

• Wheeling Charges: Fee for using distribution network (paid to the distribution licensee).
• Transmission Charges: For use of interstate or intrastate transmission network.
• Wheeling/Transmission Losses: Electricity losses during transmission/distribution usually apportioned and paid for in kind or as fees.
• Cross-Subsidy Surcharge (CSS): Levied on open access consumers to compensate DISCOMs for loss of high-tariff consumers who subsidize residential/agriculture segments.
• Additional Surcharge: To compensate for stranded fixed costs or obligations; permitted under the Electricity Act.
• Scheduling/DSM Charges: For deviations from schedule and related market/settlement charges.
• Banking Charges (for RE): If banking of RE is allowed, states may levy charges for banking and wheeling.

Many SERCs have been progressively rationalizing CSS and additional surcharge to encourage open access, especially for renewables.

Benefits of Open Access

• Competition and Consumer Choice: Large consumers can source cheaper power or greener energy.
• Cost Savings: Bulk consumers often negotiate lower tariffs than local tariff slabs.
• Renewable Energy Uptake: OA facilitates corporate procurement of green power, supporting India’s clean-energy goals.
• Efficiency and Innovation: Encourages market-based contracts, demand response, and new business models (aggregators, trading).
• Investment Signals: Opens opportunities for new generation projects and better utilization of existing generation.

Challenges & Constraints

• Cross-Subsidy and Financial Health of DISCOMs: Loss of high-tariff consumers can worsen DISCOM finances; regulators balance consumer choice and DISCOM viability via CSS/additional surcharge.
• Operational Complexity: Scheduling, forecasting, and dealing with deviations require robust systems (SLDC/RLDC processes).
• Infrastructure Bottlenecks: Limited transmission/distribution capacity and congestion can restrict OA flows.
• Regulatory Variability: State-wise differences in rules, charges, and eligibility create uncertainty.
• Transaction Costs: Application fees, bank guarantees, and complex settlement increase administrative overhead.
• Curtailment & Commercial Risks: In times of system stress, OA transactions may be curtailed; consumers face supply reliability risks.

Impact on Renewables & Corporate Procurement

Corporate Renewable PPAs and third-party open access have been a major driver of renewable energy deployment. However:

• Charges like CSS and wheeling fees can reduce the financial attractiveness of RE OA.
• Many states provide exemptions or preferential treatment for solar/wind projects to promote green energy.
• Policy push (like Renewable Purchase Obligations and Green Open Access provisions) aims to expand corporate green procurement.

Recent Trends & Reforms

• Greater emphasis on facilitating renewable open access: many states have simplified procedures and offered concessions to RE.
• Shorter timelines and online application processes for OA approvals in several states.
• Debates and regulatory action around rationalizing CSS to strike a balance between DISCOM sustainability and competition.
• Development of power exchanges and ancillary markets to integrate OA transactions with market mechanisms.

(As regulatory details change frequently, consult the latest SERC/CERC orders and state policies for current rates and rules.)

Best Practices for Consumers / Businesses Considering Open Access

• Conduct a total-cost analysis: consider tariffs, wheeling, losses, CSS, additional surcharge, transaction costs, and curtailment risk.
• Evaluate reliability and backup power plans (especially for critical loads).
• Negotiate long-term PPAs carefully; include termination, force majeure, and curtailment clauses.
• Use professional advisors or experienced traders/developers familiar with state regulations and SLDC procedures.
• Explore hybrid strategies (partial OA + DISCOM supply) to hedge risks.
• For renewable procurement, evaluate RE certificates (RECs) and grid-connectivity/banking provisions.

Policy Recommendations (for Policymakers)

• Continue rationalizing cross-subsidy surcharge and additional surcharges to avoid discouraging competitive procurement while protecting DISCOM health through targeted compensation or transition mechanisms.
• Invest in strengthening transmission/distribution infrastructure and congestion management tools.
• Standardize OA procedures and reduce administrative friction with single-window, online systems.
• Promote market-based instruments (power exchanges, ancillary markets) to integrate OA with system needs and provide liquidity.
• Offer targeted incentives for renewable OA, especially for corporate offtake that helps meet climate goals.
• Improve forecasting, metering, and settlement infrastructure to minimize scheduling deviations and disputes.

Green Open Access (Green OA) in Electricity in  India

What is Green OA:
Green Open Access allows consumers to procure renewable electricity (solar, wind, small hydro, biomass, etc.) from generators or traders by using the existing transmission/distribution network. It gives buyers (often large industries, commercial establishments, or aggregators) the right to wheel green power from a generator to their site without buying electricity from the local DISCOM as their sole source. The salient points are:

• The energy must be from a renewable source.
• Transactions use wires owned by transmission/distribution licensees and follow scheduling/settlement rules.
• Often accompanied by regulatory incentives or preferential treatment compared with general open access.

Why it matters:

• Enables corporate renewable procurement and large-scale offtake of green power.
• Supports India’s renewable targets and decarbonization goals.
• Facilitates virtual/netting arrangements and renewable certificates in many cases.

Legal & regulatory basis

Green Energy Open Access (GEOA) Rules, 2022

The GEOA Rules introduced key reforms to simplify renewable energy access for C&I consumers. These rules clarified critical aspects like consumer eligibility, electricity banking and the various charges associated with open access, such as banking and standby charges. It introduced exemptions on additional surcharges to boost investment in green energy, benefiting offshore wind and green hydrogen projects. The rules created a user-friendly and investor-friendly framework by streamlining processes and reducing costs, driving momentum in India’s renewable energy sector.

• Electricity Act, 2003: provides the statutory basis for non-discriminatory open access.
• CERC (for inter-state) and State ERCs (for intra-state) issue regulations and orders specifically addressing open access; many states have separate provisions or relaxations for green/open access for renewables.
• National policies (e.g., National Tariff Policy, Renewable Purchase Obligations) encourage renewable OA.

Typical features and incentives of Green OA

• Reduced or waived Cross-Subsidy Surcharge (CSS) and/or Additional Surcharge for renewable OA in many states (subject to state rules).
• Preferential queue or expedited approvals for renewable projects.
• Banking, wheeling, or netting provisions specifically for renewable energy (terms vary by state).
• Priority scheduling of RE in many operational regimes (subject to grid constraints).

Who uses Green OA

• Corporates and large commercial/industrial consumers seeking direct renewable supply.
• Captive renewable projects supplying their own consumption.
• Traders and aggregators arranging green power for multiple buyers.
• Distribution licensees procuring renewable energy via third-party sources.

The Ministry of Power amended the GEOA Rules in January 20234 and May 20235 , bringing in several key changes.

 • One of the most significant changes was allowing aggregation of the minimum contract demand for eligibility. This allowed the grouping of smaller connections, promoting the growth of smaller-scale renewable energy projects and fostering a decentralised energy generation landscape.

• Offshore wind projects commissioned by December 2032 were exempt from additional surcharges.

• The amended rules also raised standby charges from 10% to 25% of the respective state’s energy charges to ensure grid stability and improve demand management.

• The amendments improved the clarity of energy banking provisions by defining the banking cycle, empowering states to offer banking with a settlement period of more than one month.

Salient Features of GEOA Rules (after amendments) Parameters GEOA Rules (after amendments)

Eligibility

• Any consumer (with single or multiple connections) having aggregated contract demand/sanctioned load ≥ 100 kilowatt (kW)

• No capacity limit for captive consumers

Nodal Agency

• Central Transmission Utility (CTU) - for inter-state General Network Access (GNA)

• State Transmission Utility (STU) - for intra-state LTOA and MTOA

• Regional Load Dispatch Centre (RLDC) - for inter-state temporary GNA

• State Load Dispatch Centre (SLDC) - for intra-state STOA

Open Access Charges

• After adding two charges, six kinds of open access charges have been specified:

• Transmission charges

• Standby charges

• Wheeling charges

• Cross Subsidy Surcharge (CSS)

• Banking charges

• Other fees and charges such as load dispatch centre fees and scheduling charges, deviation settlement charges as per the relevant regulations of the commission

• Additional Surcharge (AS) is not applicable if electricity is produced from offshore wind projects commissioned up to December 2032 and supplied to the Open Access Consumer.

CSS and AS do not apply if power is produced from Waste-to-Energy plants.

• Standby charges <= 25% of energy charges

Banking

• Minimum banking settlement period: Monthly (at least)

• Minimum banking allowed (as % of energy consumption): 30%

• Credit for the banked energy cannot be carried forward to the subsequent banking cycles and unutilised surplus banked energy shall be considered lapsed at the end of each banking cycle

Open Access Grant Procedure

• All open access applications are to be submitted on the centralised open access portal

• Approval window of open access applications by concerned nodal agency: 15 days • Open access applications priority: LTOA

• Open access applications priority in the same category: First in, first out.

Apart from the amendments, the Ministry of Power has directed the Forum of Regulators (FOR) and the National Load Dispatch Centre (NLDC) to formulate enabling provisions for open access, as stipulated in the GEOA. In September 2022, the FOR released a report on Developing Model Regulations on Methodology for Calculation of Open Access and Banking Charges under the GEOA Rules. This report established a transparent methodology for determining open access charges, ensuring they are reasonable and reflect the actual cost incurred by distribution licensees.

In September 2022, the NLDC issued a comprehensive report on the Procedure for Grant of Green Energy Open Access, detailing processes for approvals, revisions, curtailments and obtaining standing clearance. The NLDC has revised the document four times to incorporate feedback from the FOR and GEOA amendments, standardising the process and streamlining open access to renewable energy.

The Future of Open Access in India    Outlook, Opportunities and Risks

Open Access (OA) is likely to expand in India over the next decade, driven by renewable energy growth, corporate sustainability demand, market reforms, and digitalization. However, its pace and form will be shaped by DISCOM financial constraints, transmission capacity, regulatory choices (especially on cross‑subsidy and surcharges), and operational integration with electricity markets. The net result will be a more competitive, greener power system but one that requires calibrated policy action to avoid adverse impacts on grid stability and utility finances.

Open Access in India is moving from a niche mechanism to a mainstream tool for competitive and green power procurement. The pace and equity of this transition depend on coordinated regulatory reform, grid investment, market development, and pragmatic support for DISCOMs. With the right mix of policy incentives, infrastructure, and market tools especially focused on renewables and flexibility OA can become a major enabler of India’s decarbonization and industrial competitiveness.

Key drivers shaping the future

• Corporate sustainability and demand for green power: Large businesses will continue to push for direct renewable procurement, driving demand for Green Open Access and virtual structures.
• Renewable energy scale-up: Large additions of wind and solar create more sellers and lower marginal prices, increasing interest in OA transactions.
• Market development: Growth of power exchanges, short-term wholesale markets, ancillary services and demand-response mechanisms will make OA integration smoother and more commercial.
• Digitalization and process simplification: Single-window online approvals, better scheduling/forecasting tools, and smart metering will reduce transaction costs and curtailment disputes.
• Policy & regulatory signals: Central and state regulators’ decisions on CSS, additional surcharge, and special concessions for renewables will determine economic attractiveness of OA.
• Transmission and distribution investments: Grid strengthening, interconnection build‑out, and congestion management will determine the physical feasibility of expanded OA.

Likely trends (3–10 years)

1. Greater uptake of Green Open Access and corporate PPAs
   • Corporates will increasingly source renewables via OA (physical OA, pooled OA, and virtual PPA hybrids). States offering concessional charges for RE will see faster adoption.
2. Continued regulatory differentiation by state, with gradual convergence
   • States with forward‑looking regulations (online portals, waived/reduced CSS) will lead; other states will gradually reform under pressure and central guidance, producing partial convergence but persistent heterogeneity.
3. Reform and rationalization of cross‑subsidy and additional surcharge structures
   • Policymakers will pursue staged reductions or redesigns (targeted compensation, transition funding, or time‑bound levies) to avoid abrupt financial stress on DISCOMs while enabling OA.
4. Expansion of pooled/aggregated OA models and third‑party aggregators
   • Aggregators will bundle demand from several buyers to meet eligibility thresholds, lowering barriers for smaller consumers to access green OA.
5. Integration with power exchanges and flexibility markets
   • OA scheduling and settlement will increasingly use exchange-based contracts, day-ahead/real-time markets, and ancillary service procurement to manage variability and reduce curtailment.
6. Increased use of digital/forecasting tools and storage co-location
   • Better forecasting and battery/storage co-located with renewable projects or buyer sites will reduce imbalance penalties and increase reliability for OA consumers.
7. Emergence of new commercial models (virtual OA, REC swaps, corporate offtake platforms)
   • Virtual PPAs and REC-based attribute transfers will remain important where physical wheeling is constrained or uneconomic.

Key constraints and risks

• DISCOM financial health and political economy: If reductions in CSS/additional surcharges are too rapid without compensatory mechanisms, DISCOMS’ revenue gaps may widen, risking subsidies or higher tariffs for captive consumer segments.
• Transmission and distribution bottlenecks: Congestion and network constraints will limit physical OA flows until investments catch up.
• Regulatory fragmentation: State-level variation in rules, timelines, and charges will keep transaction complexity high.
• Curtailment and reliability risk: Variable renewable generation without adequate flexibility/backup can create supply instability and commercial risk for OA buyers.
• Equity and access concerns: Small consumers and priority sectors (domestic, agriculture) must be protected policy design must balance competition with social objectives.

Policy options and recommendations for central and state policymakers:

• Adopt a phased, transparent roadmap to rationalize CSS/additional surcharges with clear timelines and compensatory measures for DISCOMs (e.g., targeted transition support, payment security mechanisms).
• Fast-track grid investments in inter-state and intra-state transmission and improve congestion management (market-based congestion pricing, long-term transmission planning).
• Encourage single-window, digital OA portals that integrate SLDC/RLDC approvals, scheduling, and settlement to lower transaction costs and processing time.
• Promote pooled/aggregated OA models and reduce eligibility thresholds where feasible to democratize access to green power.
• Strengthen forecasting, metering, and settlement systems; mandate/Nudge smart meters and near-real-time telemetry for OA participants.
• Support storage and flexibility markets (capacity mechanism, ancillary services) so OA buyers can manage variability and reduce imbalance penalties.
• Use targeted measures (time-limited waivers, differentiated CSS for renewables) to incentivize early adoption while monitoring DISCOM financials.
• Standardize contractual templates and PPA clauses for OA to reduce negotiation friction and legal risk.

For DISCOMs and system operators:

• Work on improved commercial mechanisms (netting agreements, banking for renewables where possible) and transparent curtailment rules.
• Diversify revenue models: offer value-added services (demand response, behind-the-meter solutions) and grid services to capture new value streams.
• Improve operational coordination with RLDC/SLDC and market operators to better integrate OA transactions and manage grid balance.

For corporates and buyers:

• Use pooled/aggregated procurement or flexible procurement strategies (mix of OA, exchange purchases, RECs and storage) to hedge risks.
• Include robust curtailment and imbalance provisions in contracts; assess total landed cost including surcharges and transmission charges.
• Explore co-investment in local flexibility (storage, demand response) to reduce exposure to imbalance charges and improve reliability.

Scenarios:

• Accelerated adoption (optimistic): Rapid regulatory reform, infrastructure investment, and DISCOM transition mechanisms lead to widespread green OA, fast corporate decarbonization, and deeper wholesale markets.
• Gradual transition (base case): Steady but uneven growth in OA with leading states and corporates driving demand; regulatory reforms unfold slowly; physical constraints cause localized bottlenecks.
• Fragmented or stalled (pessimistic): DISCOM financial pressures and slow grid investment slow OA expansion; high surcharges remain, restricting OA to niche or interstate transactions and virtual/REC workarounds.

What to watch (indicators)

• SERC/CERC orders on CSS and additional surcharge reform.
• State-level OA portal rollouts and processing time statistics.
• Transmission build-out milestones and congestion indices.
• Volume of corporate RE PPAs and open access applications (state-wise).
• Market liquidity and product innovation on power exchanges (day-ahead, intra-day, ancillary services).