India is set to see a drastic over-haul in the way its manufacturers, especially energy-intensive industries, buy electricity, as rates on exchange-driven markets dive to as low as ₹1 per unit during peak solar hours. This signals a definitive move away from the legacy model and a strong push toward embracing more flexible and cost-effective open access mechanisms.
Industry data for FY26 points to a more than 50% rise in commercial and industrial (C&I) consumer participation on power exchanges, clearly indicating how readily these companies are moving to harness this game-changing trend as they look to bring down their operational costs and elevate their competitive edge in global and domestic markets.
Why the Switch to Power Exchanges Makes Strategic Sense for Industry
For the most part of industrial processes, be it cement, steel, auto, chemicals, or even paper, electricity represents a significantly large share – often upwards of 50% – of the total cost of production. Hence, even a marginal decline in these costs can lead to a huge improvement in profit margins and the company’s bottom line. The current situation offers just that, with electricity on exchanges dipping below the one-rupee mark during a good part of the solar generation period in FY26, with the price even scraping near zero on some occasions.
This has made it all the more appealing for companies to diversify their energy sourcing and leverage market prices whenever opportunities arise.
In fact, it has become a norm now for many organizations to strategically combine power procurement through exchanges with traditional sources such as discom-based arrangements, captive generation plants and specific renewable energy projects.
How Renewables Are Driving Down the Prices
The single biggest driving force behind the low cost of electricity comes from the dramatic expansion of renewable energy, especially solar power across India. Increased solar generation capacity has led to an over-supply of electricity during the day, which is driving the prices down. With more electricity being produced than is being consumed during daylight hours, the prices on power exchanges plunge, a trend that is highly beneficial for industries that have the flexibility to switch their consumption to the periods when renewable generation is at its peak.
Even better, it supports sustainability goals as these are typically cleaner energy sources.
Industries face increasing pressure to reduce their carbon footprint from investors and consumers and utilizing renewable energy procurement from power exchanges is an attractive way to achieve this goal.
Understanding the Open Access Regime
The landscape of power procurement in India underwent a massive shift with the Electricity Act of 2003, which laid the foundation for the open access system. The legislation enabled eligible consumers to buy power directly from generators, power traders, or through competitive markets, rather than just depending on local state-run electricity providers or discoms. Today, industrial consumers have access to several dynamic markets on these platforms, including; The Day-Ahead Market(DAM), the Real-Time Market(RTM), the Green Day-Ahead Market, and Renewable Energy Certificate(REC) mechanisms.
This allows them to procure power based on their precise demand, production schedules, and real-time market rates.
The rise in C&I consumer engagement on the exchanges to the tune of 50% highlights how the energy market has come of age and is now perceived by manufacturers not just as another source of power but a strategic pillar of their cost-management framework.
Cost Management to Stay Competitive
As the Indian economy aims to significantly scale up its exports and position itself as a global manufacturing center, reducing overall production costs is the need of the hour, and cost of energy is a massive factor. Getting cheaper power can make Indian goods more competitive in the global market and boost exports. Companies that actively trade on power exchanges by purchasing energy during low-price periods, not only bring down operating costs, but also become more responsive to changing market dynamics. The real-time information available through exchanges empowers them to make more informed decisions based on prices, demand patterns and even weather predictions – a vital capability as the power market becomes increasingly complex.
Support from Policy Makers
The State governments and policy makers have played a crucial role in facilitating this transition. Many states have taken steps to incentivize the purchase of green energy through the market mechanisms, by providing benefits like exemptions from additional surcharges, a development that further encourages industries to opt for cleaner power while enjoying lower costs. The government’s focus on modernizing the Indian power sector is strengthening price discovery, competition, and transparency, making power exchanges an attractive option for the industry.
Impact on India’s Manufacturing Renaissance
The pervasive low-cost electricity procurement system supported by renewables has the potential to revolutionize the manufacturing sector in India. Increased profitability, attraction of new investments, and enhanced global competitiveness will all be the outcomes of this energy transformation. Coupled with continued expansion of renewables in the years to come, there’s no doubt that this cheap electricity regime will be the defining advantage for Indian manufacturers. This strategy also helps the nation march forward towards achieving its renewable energy and climate goals.
Conclusion: The Age of Low-Cost Power Begins for Indian Industries
The shift toward electricity prices dipping to below ₹1 per unit is a landmark event for Indian industries. A more than 50% rise in the engagement of commercial and industrial consumers on power exchanges during FY26 reflects a strong trust in these platforms. The trend is expected to accelerate in the coming years thanks to the burgeoning supply from solar sources, supportive governmental policies and the growth of open access infrastructure. This presents not just an opportunity for cost reduction but a critical strategic advantage that will define the future of Indian manufacturing and its global aspirations.
