TARIFF SHOCKER. More takers for ‘solar-plus-battery’ | Photo Credit: K Ragesh

For Coimbatore-based Natrinai Ventures, the Supreme Court’s August 2025 order directing electricity distribution companies (discoms) to liquidate their regulatory assets within four years came as a major boost. The IPO-bound company, which operates under the brand name NGE Green, plans to build 350 MW of solar capacity — 50 MW by September and the rest over the next three years — and sell power directly to consumers. The order strengthened the company’s confidence in the market.

In simple terms, liquidating regulatory assets means raising electricity tariffs. That, in turn, makes ‘solar-plus-battery’ solutions more attractive to consumers. The commercial and industrial (C&I) market is already growing rapidly, with estimates suggesting it could reach 80 GW by 2030.

Though the Supreme Court later relaxed its directive, giving discoms seven years instead of four to eliminate accumulated regulatory assets, the order has strengthened the case for open-access renewable energy.

Regulatory assets refer to costs incurred by discoms but not recovered through tariffs in a given period, leaving them to be recovered later. In effect, it is a way of postponing tariff increases.

Over time, such deferred costs have piled up to nearly ₹3 lakh crore across Indian discoms, with Tamil Nadu, Uttar Pradesh, Rajasthan and Delhi accounting for a significant share. The Supreme Court said tariffs must, as a “first principle”, reflect actual costs. It also cited Rule 23 of the Electricity Rules, whereby regulatory assets should not exceed 3 per cent of approved annual revenue requirements.

Following the order, ratings agency ICRA estimated discoms may need tariff hikes of 20-40 per cent to eliminate regulatory assets.

The apex court also suo motu directed the Appellate Tribunal for Electricity (APTEL) to monitor the implementation of its directives. Last month, APTEL pulled up the Delhi Electricity Regulatory Commission for delaying the liquidation of regulatory assets “for one reason or the other” and remarked that its conduct appeared “mala fide”.

Green opportunity

Discoms can eliminate regulatory assets either through tariff hikes or support from State governments; a combination of both appears likely. Either way, consumers — especially industrial users — are expected to face higher tariffs in the coming years.

The renewable energy industry sees opportunity in this shift. Eazhil Sudharman, Whole-time Director and CEO of Natrinai Ventures, says the company has already tied up with customers for the first 50 MW projects coming up by September, at tariffs of ₹4.20–4.60 a unit. After additional charges such as cross-subsidy levies, the effective tariff works out to be around ₹6.5 a unit — still attractive for many industrial consumers.

The ₹430-crore company expects improved realisations for future projects — a prospect that could support its planned ₹130-crore IPO.

Other industry executives share the optimism. “We are witnessing the end of the era of subsidised grid stability,” Vinay Pabba, CEO of Hyderabad-based Vibrant Energy, says. As legacy costs move from discom balance sheets to consumer bills through mandatory surcharges, the economics of renewable energy for the C&I sector become stronger, he reasons. Renewable power, he adds, is increasingly becoming “less of a procurement choice and more a long-term hedge”.

Ashwitha Tunga, policy analyst at the Winnipeg-based International Institute for Sustainable Development (IISD), calls the liquidation of regulatory assets a “welcome step” that is long overdue.

“Discoms have long struggled to raise electricity tariffs, leading to a sharp rise in electricity subsidies — reaching ₹2.4 lakh crore, or 1.3 per cent of real GDP, in FY25,” Tunga says over email. According to IISD estimates, between FY19 and FY25, discoms’ dependence on subsidies to cover operating costs increased in 23 of the 30 states and Union territories.

“Regular tariff revisions can help discoms attain financial viability while avoiding abrupt tariff shocks to consumers,” Tunga says, adding that disciplined tariff-setting practices would prevent future accumulation of regulatory assets.

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Published on May 11, 2026