Markets & Policy

GERC Proposes Revised Banking Charge Framework for Green Energy Open Access

September 2, 2026 By Gaurav Nathani 6 min read
0:00 / 07:09

The Gujarat Electricity Regulatory Commission (GERC) has released the Draft Sixth Amendment to the Terms and Conditions for Green Energy Open Access (GEOA) Regulations, 2024, signaling a major shift in how renewable energy intermittency is priced in the state. The Commission proposes a two-phase transition: an immediate reduction of the interim banking charge from ₹1.50 to ₹1.00 per unit effective September 1, 2026, followed by the implementation of a dynamic, annual determination model starting April 1, 2027. This long-term framework will move away from fixed-rate regimes, instead utilizing actual 15-minute time-block data to compute charges that reflect the real-time revenue impact on distribution licensees.

The Interim Phase and Regulatory Signaling (September 2026 – March 2027)

The Draft Sixth Amendment serves as a critical bridge for Commercial and Industrial (C&I) consumers and project developers. Currently, the Draft Fifth Amendment acts as a temporary measure, extending the existing ₹1.50 per unit rate until August 31, 2026. Starting September 1, however, the rate will drop to ₹1.00 per unit for the remainder of the 2026-27 fiscal year.

This reduction follows a GERC study of 165 GEOA consumers conducted between April 2025 and January 2026. While the study’s mathematical finding estimated the actual banking cost at ₹1.06 per unit, the Commission made a deliberate regulatory gesture by rounding the figure down to ₹1.00. This rounding is intended to provide “ease of implementation” and spur renewable energy growth, notably rejecting a far more aggressive proposal from the state holding company, GUVNL. GUVNL had submitted a CRISIL study suggesting a banking charge as high as ₹3.41 per unit; GERC declined this DISCOM-backed proposal, citing technical infirmities and the need to protect the bankability of open access projects.

The Long-Term Dynamic Methodology (FY 2027-28 Onward)

Beginning April 1, 2027, GERC will adopt a “Cumulative Banking Methodology.” The banking charge will no longer be static but will be determined annually based on the preceding calendar year’s operational data. This model relies on a complex “Scenario Logic” (Scenarios 1A, 1B, 2A, and 2B) which assesses every 15-minute block to determine if IEX market clearing prices are higher or lower than the distribution licensee’s marginal generation cost.

The formula for the annual charge is defined as the Aggregate Net Banking Cost divided by the Total Banked Energy (TBE), where TBE is strictly defined as Gross Banked Energy minus Lapsed Energy to ensure mathematical consistency. The computation factors in the following parameters:

  • Market Inputs: IEX Market Clearing Prices, weighted at 89.5% for the Day-Ahead Market (DAM) and 10.5% for the Real-Time Market (RTM).
  • Operational Variables: Marginal generation costs calculated using a weighted average of 85% Thermal and 15% Gas generation.
  • Ancillary and Storage Costs: Backing-down costs (assumed at 8% per CEA reports) and the Levelized Cost of Energy (LCOE) for Battery Energy Storage Systems (BESS) based on recent bids.
  • Technical Adjustments: Intra-state and inter-state transmission charges, along with verified distribution and transmission losses.

Regulatory Safeguards: Floor and Ceiling Rates

To shield stakeholders from extreme volatility and ensure the long-term bankability of green energy projects, the Commission has established a “Floor and Ceiling” mechanism. This boundary ensures that even if the mathematical outcome of the dynamic model fluctuates significantly, the applied charge remains within a predictable range.

Banking Charge Boundaries (Effective April 2027)

| Boundary Type | Rate per Unit |

| Floor Rate | ₹0.50 |

| Ceiling Rate | ₹1.50 |

These limits are designed to provide lender confidence by capping maximum exposure for developers while ensuring DISCOMs maintain revenue adequacy for grid management services.

DISCOM Compliance and Data Obligations

The integrity of the dynamic model depends on accurate data reporting. Distribution licensees are mandated to provide 15-minute time-block data via sworn affidavits, subject to verification by the State Load Despatch Centre (SLDC). To prevent utilities from passing the costs of administrative delinquency onto consumers, the Commission has established severe penalties:

  • Charge Devaluation: If a licensee fails to provide accurate data, the banking charge for that utility is considered “Nil” until the data is furnished.
  • Duration-Based Penalty: A deemed revenue adjustment of 1 paisa per unit per year against the Aggregate Revenue Requirement (ARR) will be applied. Crucially, this penalty is calculated on a pro-rata basis tied specifically to the number of days of non-compliance.

Operational Rules for Energy Accounting

The Draft Sixth Amendment maintains the core operational constraints established in the GEOA Regulations, 2024, ensuring continuity in energy accounting practices.

Quantum Limit Banked energy remains capped at 30% of the consumer’s total monthly energy consumption from the distribution licensee.

Time of Use (ToU) Restrictions The accounting follows a strict temporal logic: energy banked during off-peak periods cannot be drawn during peak hours. However, peak-period banked energy is flexible and can be utilized in both peak and off-peak slots.

Accounting Logic Settlements are managed on a First-In-First-Out (FIFO) basis within a single one-month calendar billing cycle.

Lapse Provision and REC Entitlement Any surplus injection beyond the 30% threshold or energy remaining at the end of the billing cycle is deemed lapsed. However, in a significant technical nuance under Regulation 17.6(xi), while the energy does not carry forward, generating stations are entitled to Renewable Energy Certificates (RECs) to the extent of the lapsed energy, providing a critical value-recovery mechanism for developers.

Regulatory Context and Timeline

Since the notification of the principal regulations in February 2024, GERC has issued multiple extensions for the banking charge due to the complexities of validating 15-minute slot data across various state and private licensees. The Commission has now reached a stage where a data-driven model is feasible.

The reduction of the interim banking charge to ₹1.00 represents a direct mathematical saving of ₹0.50 per unit starting in September 2026. For a standard C&I project, this reduction can significantly improve the project’s Internal Rate of Return (IRR) by lowering the cost of balancing intermittent renewable generation. Furthermore, the introduction of the floor and ceiling mechanism starting in 2027 provides the long-term regulatory certainty required for infrastructure financing, ensuring that Gujarat remains a competitive destination for Green Energy Open Access.

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