Quick Facts
What wheeling charges are
Wheeling charges are fees paid to a Distribution Company (DISCOM) for the use of its distribution network to transport electricity from one party to another. The “wheeling” metaphor refers to electricity being conveyed through the network as if loaded onto wheels carrying it from origin to destination.
The compensation covers the cost of operating the network: maintenance, depreciation, technical losses, and a regulated return on capital. By collecting wheeling charges from open-access transactions, the DISCOM recovers its network costs even when the energy itself is generated by an independent party and consumed by an independent consumer.
For solar open-access projects in India, wheeling charges typically range from Rs 0.30 to Rs 1.20 per kWh. The exact figure depends on the state, the voltage level of the consumer’s connection, and concessions or exemptions applicable to renewable energy.
How wheeling charges work
In a typical solar open-access transaction, the solar plant generates power and feeds it into the grid at the plant’s substation. The power flows through transmission and distribution networks to reach the consumer’s premises. The consumer draws this energy from the DISCOM’s distribution network.
The DISCOM is paid for the use of its network. The wheeling charge is calculated based on the number of kWh that pass through the network on the consumer’s behalf. A 1 MW solar plant supplying 17,50,000 kWh annually to a consumer in the same state, at a wheeling charge of Rs 0.80 per kWh, pays Rs 14 lakh per year in wheeling fees alone.
For HT consumers (connection above 11 kV), the relevant wheeling charge is for the HT network usage. For LT consumers (below 11 kV), the charge covers both HT and LT network use, and is typically higher.
Wheeling charges across major states
| State | Approximate Wheeling Charge (Rs/kWh, HT level) | Notes |
|---|---|---|
| Maharashtra | 0.50 to 0.80 | Revised periodically by MERC |
| Karnataka | 0.40 to 0.70 | KERC orders update annually |
| Tamil Nadu | 0.60 to 1.00 | Restrictive open-access environment |
| Andhra Pradesh | 0.40 to 0.70 | Moderate rates |
| Telangana | 0.50 to 0.80 | Aligned with AP |
| Gujarat | 0.30 to 0.60 | Favourable rates for solar |
| Rajasthan | 0.40 to 0.80 | Among the lower-charge states |
| Madhya Pradesh | 0.50 to 0.80 | Moderate rates |
| Delhi | 0.40 to 0.70 | Limited open-access activity |
| Uttar Pradesh | 0.50 to 0.90 | Varies with consumer category |
These are indicative ranges. Specific values for any project should be taken from the latest SERC tariff order.
Wheeling versus transmission
Wheeling and transmission are often discussed together but cover different network levels.
Transmission charges: For using the high-voltage transmission network. Inter-state transmission (ISTS) operated by Power Grid Corporation under CERC regulation. Intra-state transmission operated by the state transmission utility (STU) under SERC regulation. Typical: Rs 0.30 to Rs 1.00 per kWh.
Wheeling charges: For using the low and medium-voltage distribution network operated by DISCOMs under SERC regulation. Typical: Rs 0.30 to Rs 1.20 per kWh.
For a typical intra-state open-access transaction, both transmission and wheeling apply. The total network charge is often Rs 0.80 to Rs 1.80 per kWh combined.
Wheeling and the open-access cost stack
Open access involves multiple charges layered onto the contracted solar tariff:
Contracted tariff with developer: Rs 3.00 to Rs 4.50 per kWh.
Transmission charges: Rs 0.30 to Rs 1.00 per kWh.
Wheeling charges: Rs 0.30 to Rs 1.20 per kWh.
Cross-subsidy surcharge: Rs 1.00 to Rs 3.00 per kWh (state-dependent).
Additional surcharge: Rs 0.10 to Rs 0.50 per kWh (state-dependent).
Standby charges: Rs 0.10 to Rs 0.30 per kWh.
Losses: 4% to 8% of energy.
Total landed cost: Rs 4.50 to Rs 6.50 per kWh.
Against retail C&I tariffs of Rs 8 to Rs 12 per kWh, the savings are still substantial. But wheeling and other charges erode the headline solar tariff significantly.
Renewable concessions
Several states offer concessions on wheeling charges for renewable energy projects.
Reduced rate: Some states charge 50% to 75% of standard wheeling for renewable open access.
Time-limited exemption: New projects commissioned within a defined window may be exempt for a fixed period.
Inter-state ISTS waiver: As discussed for transmission, ISTS waiver applies to solar and wind generators commissioned by certain deadlines. Wheeling continues at the state level.
Renewable purchase obligation contribution: Open-access renewable energy that helps the DISCOM meet RPO sometimes attracts concessional treatment.
The concessions are notified through SERC orders and reviewed periodically. They are subject to change.
Common mistakes regarding wheeling charges
Confusing wheeling charges with transmission charges. They are different and both apply.
Not budgeting for wheeling in financial models. The savings calculation must include all charges.
Assuming wheeling rates are stable. They are revised in annual or biennial SERC tariff orders.
Not checking concessional rates. Some renewable projects qualify for reduced wheeling that the developer fails to apply for.
Ignoring voltage level differences. HT and LT wheeling rates differ significantly.
Forgetting losses. Wheeling charges are calculated on energy delivered; technical losses are also accounted for separately.
Best practices
Build wheeling charges into open-access financial models using current state SERC orders, not historical figures.
Engage the DISCOM and the SERC’s grievance redressal forum if wheeling charges seem inconsistent with notified rates.
For very large open-access projects, evaluate dedicated transmission line (direct line from generator to consumer) versus public network wheeling, on a total cost basis.
Combine open-access solar with on-site rooftop solar to reduce the volume of energy subject to wheeling charges.
Track SERC tariff order revisions and update financial models accordingly.
Standards and references
Wheeling charges are determined by SERCs under Section 86 of the Electricity Act 2003. The CERC issues separate methodology and orders for inter-state transmission. The Forum of Regulators has issued model frameworks that some states adopt. SERC orders are public on respective state websites.
Related glossary terms
- Open Access Solar
- Cross-Subsidy Surcharge
- Banking in Electricity
- Power Purchase Agreement
- DISCOM
- SERC
- ISTS Charges
- Intra-State vs Inter-State
Key takeaways
Wheeling charges are fees paid to the DISCOM for using its distribution network to deliver electricity from a generator to a consumer in an open-access transaction. For solar open-access projects in India, wheeling typically costs Rs 0.30 to Rs 1.20 per kWh depending on state and voltage level. Wheeling is separate from transmission charges and cross-subsidy surcharge. Together with other open-access charges, wheeling reduces but does not eliminate the savings of corporate solar versus retail grid tariffs. State-specific SERC orders set the applicable rates, which are revised periodically.