At What Point Should a Factory Seriously Consider Open Access?
Most factory owners ask this too late. Here are the 5 signals that say you're ready — right now.
Why most factories evaluate open access too late?
For most manufacturers in India, electricity is the second or third largest operating expense — after raw materials and labour. Yet it is treated as a fixed cost. The DISCOM bill arrives, the accounts team processes it, and the number is accepted as a given. There is no procurement strategy, no competitive benchmarking, and no structured review of alternatives.
This is how overpayment becomes invisible. A factory paying ₹9.50 per unit to MSEDCL does not feel the cost of each individual unit. It feels the aggregate: a monthly bill of ₹15–25 lakh for a mid-sized plant, or ₹1–2 crore for a large one. The number is large, but it has always been large. It does not trigger action until something external forces the question — a tariff hike, a margin squeeze, or a competitor who has already switched.
The problem compounds because energy procurement is rarely a standing agenda item for the management team. Unlike raw material procurement — where multiple vendors are evaluated, prices are benchmarked quarterly, and contracts are renegotiated annually — electricity procurement sits with the electrical or maintenance team, not with the CFO or procurement head. The decision to explore alternatives is not part of the operating rhythm. It happens only when an external trigger forces it.
By the time most factory owners seriously evaluate open access, they have already spent 12–24 months paying more than they needed to. The five signals below indicate when a facility is ready to act. Recognising them early is the difference between proactive procurement and reactive cost-cutting.
Signal 1: Your connected load is above 100 kW
Until 2022, the minimum threshold for open access was 1 MW of connected load. This limited access for a large number of small and mid-sized manufacturers. The Green Open Access Rules, 2022, notified by the Ministry of Power, reduced this threshold to 100 kW.
Subsequent clarifications and amendments further expanded this scope by allowing consumers to aggregate multiple connections to meet the 100 kW threshold. This means that even consumers with smaller individual loads can collectively qualify for green open access within a defined distribution area, significantly broadening the base of eligible users.
In practical terms, this shift means that a much larger segment of commercial and industrial consumers is now eligible to evaluate open access procurement. If your facility has a connected load above 100 kW and is currently purchasing all its electricity from the DISCOM, you are eligible to explore open access. This is the first and most binary of the five signals: you either qualify or you do not. Most mid-sized factories fall within this eligibility range.
A common misconception is that open access requires the factory to fully exit the DISCOM supply. This is not the case. A factory can procure a portion of its electricity through open access — for instance, aligning daytime demand with solar generation — while continuing to draw the balance from the DISCOM. The 100 kW threshold applies to the consumer’s connected load, not to the quantum of power being procured through open access, making the transition more flexible than it is often perceived.
Signal 2: Your effective per unit DISCOM tariff exceeds ₹8–10
Open access is not free electricity. It involves a cost stack: the price of power (from IEX or a bilateral contract), plus transmission charges, wheeling charges, cross-subsidy surcharge (CSS), SLDC scheduling charges, and in some cases, additional surcharge. The total landed cost typically ranges from ₹6.50 to ₹8.50 per unit, depending on the state and the procurement route.
This means open access delivers meaningful savings only when your current DISCOM tariff is above this landed cost range. For HT industrial consumers in states like Maharashtra (MSEDCL), Rajasthan (JVVNL/AVVNL), or Madhya Pradesh (MPPKVVCL), the effective tariff — including energy charges, demand charges, fuel adjustment charges, time-of-day differentials, and electricity duty — often lands between ₹9 and ₹12 per unit.
If your effective DISCOM rate is below ₹8 per unit (common in states like Chhattisgarh or parts of Gujarat), the open access arbitrage may not be large enough to justify the regulatory and operational overhead. If it is above ₹9, the economics almost certainly work.
Signal 3: You have consistent daytime consumption
Most open access procurement today involves solar energy, either from a dedicated solar plant or via exchange-based green contracts. Solar generation follows a predictable profile: it ramps up from 7–8 AM, peaks between 11 AM and 2 PM, and tapers off by 5–6 PM.
If your factory operates primarily during daytime hours — a single-shift or double-shift operation — your consumption profile aligns naturally with solar generation. This alignment reduces scheduling risk, minimises deviation settlement mechanism (DSM) exposure, and makes the economics of open access solar straightforward.
Factories with round-the-clock (24/7) operations can still benefit from open access, but the procurement structure is more complex. Solar covers the daytime portion; the nighttime load remains on DISCOM or requires a hybrid contract. The savings are real, but the modelling requires more care.
The cost of waiting
The four signals above are not theoretical. They describe the profile of thousands of Indian factories that are currently eligible for open access but have not evaluated it. The cost of this inaction is not abstract — it is a monthly number.
Consider an illustrative scenario: a factory in Maharashtra paying an effective DISCOM rate of ₹9.50/unit. If open access procurement could deliver a landed cost of ₹7.00/unit, the saving is ₹2.50/unit. On monthly daytime (solar hours) consumption of 250,000 kWh, that is ₹6.25 lakh per month — or approximately ₹75 lakh per year. Every month of delay is ₹6.25 lakh in savings that did not materialise.
These numbers are illustrative and will vary based on your state, your actual consumption, the procurement route, and the market conditions at the time of purchase. But the direction is consistent: for most HT industrial consumers paying above ₹8.50/unit, the savings from open access are real and measurable.
It is also worth noting what the three signals do not require. They do not require you to have a rooftop. They do not require you to own a generator. They do not require engineering expertise in-house. Open access is a procurement route — you are buying electricity from a different source, not building a power plant. The regulatory and scheduling complexity is real, but it is handled by aggregators and procurement specialists, not by your operations team. The factory's role is to consume electricity as it always has; the source changes, and with it, the cost.
The first step is not a commitment. It is a check: does your facility qualify, and what would the indicative economics look like? That question takes less than a week to answer. The answer determines whether you continue paying the current rate — or start reducing it.
References
1. Ministry of New and Renewable Energy (MNRE) — Green Open Access Rules, 2022. Notified 6 June 2022. Threshold reduction from 1 MW to 100 kW for renewable energy open access.. https://mnre.gov.in
2. Maharashtra Electricity Regulatory Commission (MERC) — Tariff Order for MSEDCL, FY2025–26. HT Industrial tariff schedule, including energy charges, demand charges, and ToD multipliers.. https://mercindia.org.in
3. Indian Energy Exchange (IEX) — Monthly Market Report. DAM clearing price data, market volumes, and price trends. Verify latest report from IEX market data portal.. https://www.iexindia.com/market-data
4. Gujarat Electricity Regulatory Commission (GERC) — Open access charge schedule. CSS, wheeling charges, transmission charges, and SLDC charges for HT industrial consumers.. https://gercin.org
5. Karnataka Electricity Regulatory Commission (KERC) — Open access regulations and charge schedule. For industrial consumers.. https://kerc.karnataka.gov.in
6. Central Electricity Authority (CEA) — Monthly generation reports and installed capacity data. . https://cea.nic.in
