Solar project developers fear a significant drop in capacity additions among Maharashtra’s prosumers because of the Maharashtra Electricity Regulatory Commission’s (MERC) proposal to impose energy banking restrictions.

The MERC tariff order has come under severe criticism from solar project developers as the energy banking rules can effectively reduce the savings generated from a solar project and disincentivize solar adoption for the Maharashtra State Electricity Distribution Company (MSEDCL) consumers.

The National Solar Energy Federation of India (NSEFI), a coalition of several solar project developers, has petitioned the Bombay High Court against MERC’s move.

In its petition, NSEFI argued that the revised limitations on the use of banked solar power at the same time-of-day slot defeat the purpose of power banking. It also submitted that these changes in power banking will extend to existing open access agreements and long-term transmission contracts, despite settled law that such changes must apply prospectively.

The petition also noted that the new banking restriction only applies to consumers of MSEDCL, while consumers of distribution companies (DISCOMs) of Tata Power and Adani Electricity remain unaffected.

The High Court has admitted the petition filed by the NSEFI.

Non-Viability of Solar Projects

Krishnan Rajagopalan, Head (IPP) at Jakson Green, stated that the new MERC tariff order limiting time-of-day banking alters how solar energy generated during the day can be utilized.

“Earlier, solar generation could offset consumption at any time of the day, but under the new framework, consumption and generation must align within the same time slot. While the regulation intends to ensure grid stability and efficient energy utilization, it reduces the operational flexibility for commercial and industrial (C&I) customers with varying load patterns. This could impact the economic returns of standalone solar projects, as surplus daytime generation may not always align with consumption needs,” Rajagopalan said.

Manish Khare, Co-Founder and MD at Khare Energy, said that Maharashtra imposes a 10% to 15% higher tariff for C&I consumers compared to other states. The additional restrictions will hurt the solar sector.

He added that these limitations on energy banking can reduce solar savings by at least 10%.

Commenting on the revised MERC tariff structure, Sonam Chandwani, Managing Partner at KS Legal & Associates, said the new rules erode the business case for third-party and group captive solar projects.

“Developers lose flexibility and the ability to offer competitive power purchase agreements (PPAs) to C&I clients. Moreover, the increased open access costs and rigid timelines create regulatory uncertainty and cash flow instability, effectively penalizing decentralized, clean energy sources while disincentivizing new investment in the sector,” she said.

Impact of the Order

Solar project developers also say that limiting banking facilities could lead to at least a 30% reduction in solar capacity additions considered by the C&I sector.

Nilesh Mahajan, Director at Roofsol Energy, stated that the larger impact will be seen among industries that require a continuous power supply.

“Maharashtra is one of the top rooftop solar markets in India, and this move will have a detrimental impact on solar capacity additions in the state. It also impacts industries that rely on solar open access. The limitations placed on power banking will lead to a lapse of the extra solar power generated during the day. While this may not reduce the savings on solar, C&I consumers are likely to reduce solar capacity additions,” added Mahajan.

Mahajan said the order is already causing companies to renegotiate the capacities of their finalized projects.

“Third-party solar developers offering long-term PPAs face diminishing returns. Without predictable policy frameworks and with increasing charges, smaller consumers may find grid power cheaper in the short run, stalling private sector adoption of renewables,” Chandwani said.

She argued that C&I consumers with high daytime loads (such as manufacturing plants or IT parks), particularly those with captive or rooftop solar projects, can still deliver meaningful savings, particularly if they consume power as it is generated.

The MERC order has also imposed additional grid support charges for MSEDCL consumers.

Solar project developers argue that DISCOMs are targeting the renewable energy sector while failing to address the revenue losses they have endured over the years.

“DISCOMs lose 30% to 40% of revenue due to various factors, but by removing losses endured by them due to power banking, they can plug a large share of the losses,” said Mahajan.

Solar project developers also believe that the move could lead to a greater reliance on battery energy storage systems (BESS). However, adding BESS to solar projects remains unviable at current prices.

At current prices, adding a BESS to an existing renewable energy project could require an additional investment of ₹3 million (~$34,585)/MW to ₹5 million (~$57,642)/MW.

Changes Required

Solar project developers believe that while the new tariff framework is designed to enhance grid stability, a balanced approach is necessary.

“Ensuring a balanced approach that supports standalone solar while enabling transition towards hybrid and battery-backed solutions will drive optimal outcomes for both developers and consumers,” Rajagopalan said.

Chandwani added that the policy lacks clarity on grandfathering existing PPAs, creating retrospective uncertainty. “A revision is needed to restore parity and regulatory stability, possibly by allowing monthly or seasonal banking and reducing charges that disproportionately burden renewable generators.”