New power tariffs will save you money during the day, but cost more at night

By India Today Business Desk: The government has announced new electricity rules that will allow for cuts in power tariffs of up to 20 per cent during the day and increases of up to 20 per cent during peak night hours, reported news agency Reuters.

The system is expected to reduce demand on the grid during peak times and help India work towards its target of achieving 65 per cent of its energy capacity from non-fossil fuels by 2030.

The new tariffs will come into effect from April 2024 for commercial and industrial consumers and a year later for most other consumers except those in the agricultural sector.

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“Since solar power is cheaper, the tariff during the solar hours will be less, so the consumer benefits,” Power Minister R. K. Singh said in a statement.

“During non-solar hours, thermal and hydropower as well as gas-based capacity is used – their costs are higher than that of solar power – this will be reflected in time-of-day tariff.”

How will it impact consumers?

The move is expected to benefit consumers who are able to shift their energy usage to the daytime.

For example, households that can run their washing machines and dishwashers during the day could save money on their electricity bills.

However, consumers who use more energy at night, such as those who run air conditioners, could see their bills go up.

Overall, the new tariffs are a step towards making India’s electricity grid more efficient and sustainable.

They are also a way to encourage consumers to use less energy during peak times, which will help to reduce demand on the grid.

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Massive surge in power demand

The new electricity tariff rules come at a time when power demand grew at its fastest pace in 33 years due to rising temperatures and a surge in economic activity. As a result, India faced its worst electricity shortage in FY23.

A 2022 draft government plan estimated India’s power demand to grow twice as fast till March 2027, fuelled by higher power consumption during the summer months and increased industrial activity.

It highlighted that annual electricity demand may grow at an average of 7.2 per cent over the five years ending March 2027, nearly double the growth rate of over 4 per cent seen during the five years to March 2022.