Time-of-Day Tariffs and Factory Solar Savings in India, 2026

Time-of-day (ToD) tariffs can make factory solar savings higher or lower than a flat-tariff estimate. India’s 2023 central consumer-rights amendment requires ToD for commercial and industrial consumers above 10 kW, with a peak-period tariff at least 1.20 times the normal tariff and solar-hour tariff at least 20% below normal for that category. However, those rules apply to the energy-charge component, while each State Commission and DISCOM specifies actual slots, tariff orders, metering and implementation. ROI therefore needs interval consumption and generation data, not one average ₹/kWh assumption.

Key Takeaways

• The central framework set ToD implementation no later than 1 April 2024 for commercial and industrial consumers with maximum demand above 10 kW.
• C&I peak-period ToD must be at least 1.20 times normal tariff; solar-hour tariff must be at least 20% lower.
• “Solar hours” means eight hours specified by the State Commission; they are not automatically 9 a.m. to 5 p.m.
• ToD applies to the normal tariff’s energy-charge component, not necessarily demand charges, duty or every bill line.
• Rooftop solar avoids the tariff applicable when each unit would otherwise have been imported.
• Use the factory solar savings guide only after replacing generic rates with the live tariff order.

What does the central ToD rule actually require?

Rule 8A, inserted by the Electricity (Rights of Consumers) Amendment Rules, 2023, provides the national framework. For C&I consumers with maximum demand above 10 kW, ToD was due no later than 1 April 2024; for other non-agricultural consumers, no later than 1 April 2025. For smart-meter consumers, the rule also links effectiveness to installation.

The State Commission specifies the tariff. During peak periods, C&I ToD must not be less than 1.20 times normal tariff. During specified solar hours, it must be at least 20% lower than normal. Peak-hour duration cannot exceed the notified solar-hour duration. Solar hours are eight hours in a day as specified by the State Commission.

“Normal tariff” and implementation must be read in the applicable regulatory documents. The central rule is not a nationwide schedule of rupees per unit.

Why can ToD reduce the apparent value of rooftop solar?

Solar generation is concentrated during daytime. If those units avoid imports priced 20% below the normal energy charge, each self-consumed unit may save less than under a flat-price model. A proposal that multiplies annual generation by the average billed rate can therefore overstate value.

Assume, only to show method, a normal energy charge of ₹8/kWh. A solar-hour charge 20% lower would be ₹6.40/kWh, while a 1.20× peak charge would be ₹9.60/kWh. These are illustrative calculations, not any DISCOM’s current rates.

A flat ₹8 calculation would show ₹6,000, overstating this example by ₹1,120. Actual bills may include slabs, losses, fuel adjustments, banking, export credit, duty and taxes.

When can ToD increase solar project value?

Solar can still create strong savings when the plant serves a high daytime load, reduces chargeable demand where tariff rules allow, or supports operational changes that lower costly peak imports. West-facing arrays may shift some generation later, while batteries can move stored energy into peak windows. But neither is automatically economic.

A battery model should compare charging opportunity cost, round-trip losses, degradation, demand-charge effects and available cycles against the local peak/off-peak spread.

Solar exports require separate treatment. Net metering, net billing and gross metering can value exports differently from self-consumption, and ToD settlement may vary. The applicable state order controls.

What data does a bankable ToD model need?

Why are monthly bills insufficient?

A monthly total cannot locate imports in solar, normal or peak windows. Obtain at least 12 months of interval data, consistent with meter availability and billing rules.

Match these datasets on a common timestamp and time zone:

• meter imports, exports, demand and power factor;
• tariff calendar, slots, holidays, seasons and billing determinants;
• simulated solar output after losses and degradation;
• production shifts, shutdowns and planned expansion;
• outage and diesel-generator operation;
• approved metering/export limits.

Clean missing intervals, meter resets and clock drift. Preserve raw data and transformation steps for lender and auditor review.

How should avoided cost be calculated?

For each interval, calculate self-consumed solar as the lesser of load and usable solar generation, after any applicable behind-the-meter constraints. Multiply that avoided import by the marginal energy charge for that interval. Add or subtract demand-charge, export-credit, duty, surcharge and adjustment effects only according to the tariff order.

A useful formula is:

Interval benefit = avoided import × applicable marginal import charge + export × applicable export credit ± demand and other bill effects

Sum intervals to billing periods, then reconcile the model’s “without solar” bill to actual historical bills. If the model cannot reproduce the baseline bill within a reasonable documented tolerance, do not trust its savings forecast.

Which tariff documents should finance verify?

The applicable State Commission tariff order should be the starting point. Also collect the DISCOM schedule, ToD implementation circular, smart-meter rules, billing sample and any order on net metering or open access. Record effective dates; a tariff in force for FY2025-26 may not apply throughout FY2026-27.

Use a control table:

Do not cite the central 1.20× and 20% figures as proof that the DISCOM bill already applies identical slots or multipliers. Delays, amendments and local designs must be checked.

How should a CFO stress-test solar ROI?

Stress-test implemented and full-framework tariffs, lower daytime load, tariff redesign, export credit, generation and self-consumption independently.

Track avoided cost by time band. Report payback and IRR with the benefit derived from demand-charge reduction or assumed tariff escalation.

Model operational options: moving production into discounted solar hours may lower grid cost but reduce solar’s avoided price; aligning load with generation can increase self-consumption. Optimise the factory bill, not a solar KPI.

What mistakes commonly distort ToD savings?

Avoid applying ToD multipliers to the entire bill, using sanctioned load instead of the rule’s relevant maximum-demand concept without checking local implementation, and treating eight solar hours as nationally uniform clock times. Do not assume peak periods always occur after sunset or that rooftop output offsets recorded maximum demand.

Avoid peak-rate valuation, calendar omissions, export/self-consumption double counting and battery models without efficiency or degradation; retain evidence.

This article provides general financial modelling information, not legal or regulatory advice. State rules, tariff orders and billing practice determine the payable amount.

FAQ

Is the peak tariff exactly 1.20 times normal for every factory?

No. The central rule establishes a minimum for C&I peak-period ToD. The State Commission specifies the actual tariff, and the energy-charge component is the stated base.

Are solar hours the same throughout India?

No. The rule defines an eight-hour duration, but each State Commission specifies the hours. Seasonal or category details can differ.

Does rooftop solar reduce peak demand charges?

Only if generation coincides reliably with the billing demand interval and the tariff recognises that reduction. Many evening peaks receive little solar output.

Can a monthly electricity bill support a ToD ROI model?

Not reliably. Interval consumption and demand data are needed to allocate avoided imports to the correct time bands.

Does a 20% lower solar-hour tariff mean solar is uneconomic?

No. It reduces the avoided energy value relative to a flat rate, but self-consumption, project cost, demand effects, exports and operating profile determine economics.

Sources

• Ministry of Power: Electricity (Rights of Consumers) Amendment Rules, 2023, G.S.R. 437(E)

Verify the State Commission tariff order, DISCOM data before investment approval.