Many factories, malls & office complexes generate solar power during the day, send excess electricity to the grid, and draw it back at night. The grid plays the role of a free battery. That arrangement may be coming to an end with a draft amendment to the Electricity (Rights of Consumers) Rules, explains Saurav Anand
What exactly has the government proposed?
A recent draft amendment to the Electricity (Rights of Consumers) Rules by the Ministry of Power proposes changes that could fundamentally alter how electricity is priced, consumed and managed. The changes are technical, but their implications are far-reaching: electricity will no longer cost the same at all times, and large users may have to take responsibility for storing their own energy.
The draft introduces three key changes. First, it strengthens time-of-day (ToD) tariffs, where electricity prices vary depending on when it is used. Second, it allows regulators to impose charges on net metering, which has so far enabled consumers to offset consumption with solar generation.
Third, it empowers state electricity regulators to mandate energy storage systems for consumers with renewable energy installations above 500 kW. These are not headline-grabbing reforms, but together they reshape the way electricity markets function.
For large users, the era of relying on the grid as a free battery could be coming to an end, as energy management will require smarter consumption and investment in storage.
What is the ‘free battery’ problem the rules are addressing?
Under the current system of net metering, a consumer can export surplus solar power during the day and draw electricity back at night, paying only for the net usage. For example, a commercial building may export 100 units of power in the afternoon and consume 100 units in the evening.
Its net bill becomes zero. But this transaction is not costless. The discom must manage excess supply during the day — often when solar generation is already high and procure expensive power during peak evening hours.
In effect, the grid acts as a free storage system. The new rules aim to end this imbalance by ensuring that the cost of balancing supply and demand is not borne entirely by the grid. While the rules are not mandatory nationwide, state electricity regulatory commissions will decide how to implement them.
What changes for large solar users?
The most important provision is that consumers with renewable energy capacity above 500 kW may be required to install energy storage systems. This applies to large users such as factories, malls, hospitals and IT parks. Earlier, storage was optional. Now, regulators may make it mandatory depending on local conditions.
The logic is simple: if you generate excess electricity during the day, you should store it yourself and use it later, instead of relying on the grid. This could significantly change investment decisions for large consumers, making batteries a key part of energy infrastructure.
How time-of-day tariffs impact total power costs
Time-of-day tariffs introduce a clear price difference between solar hours and peak hours. Under the rules, peak tariffs must be at least 20% higher than the base rate, while solar-hour tariffs must be at least 20% lower. For instance, if the base tariff is 10 per unit, electricity could cost8 per unit during the day and Rs 12 in the evening.
This creates a strong financial incentive to shift consumption to daytime hours. For large users, this price gap can justify investing in batteries. They can store cheaper daytime power and use it during expensive peak hours, reducing costs and easing pressure on the grid.
What happens to net metering?
The draft does not eliminate net metering but changes its economics. It allows regulators to introduce a progressive charge for consumers with solar installations above 5 kW. This means that using the grid as a balancing mechanism will no longer be free. The larger the installation, the higher the potential charge.
The move also addresses another issue. Electricity tariffs in India are often slab-based, where higher consumption attracts higher rates. Net metering can reduce a consumer’s apparent usage, allowing large users to fall into lower tariff slabs and shifting costs onto other consumers. The proposed charges aim to correct this distortion.
What this signals for the future
The immediate impact will be on large commercial and industrial consumers with significant solar installations. Households and small rooftop users are unlikely to be affected in the near term, as the thresholds are designed to protect residential adoption. States with high solar penetration such as Rajasthan, Gujarat and Tamil Nadu are more likely to adopt these measures.
More broadly, the changes reflect a shift in India’s energy system. As renewable capacity grows, the grid needs to be managed more actively. The government is also strengthening oversight through measures such as improved data reporting. The message is clear: electricity in India is becoming time-sensitive and price-driven.