ToD Tariff Explained: What Time-of-Day Electricity Pricing Means for Industrial and Commercial Consumers in India

For most consumers in India, a unit of electricity has long cost the same whether it was used at noon or at nine at night. That is changing. The cost of supplying electricity now varies sharply through the day, and tariffs are being redesigned so that the bill reflects it.

For a business, the shift turns timing into a line item. The same monthly consumption can produce a different bill depending on when it happens. This page explains what the rules require, why they were introduced, how states apply them, and what a business can do about it.

What is a ToD tariff?

The idea is a price signal. In the words of the then Union Power Minister, R.K. Singh, when the rule was introduced, ToD tariffs comprising separate rates for peak, solar and normal hours “send price signals to consumers to manage their load according to the Tariff. With awareness and effective utilization of ToD tariff mechanism, consumers can reduce their electricity bills.”

ToD is not new in India. Several states have had peak and off-peak pricing for large consumers for years. What the 2023 rule added was a national floor on the differences, and a new category: the solar hours.

What do India's ToD rules require?

The rule is Rule 8A of the Electricity (Rights of Consumers) Rules, 2020, inserted by the Electricity (Rights of Consumers) Amendment Rules, 2023 (G.S.R. 437(E), 14 June 2023). Its main requirements:

Three details are routinely misreported:

• The numbers are floors, not ranges. The press release at the time summarised the rule as “10 to 20 percent” higher at peak and “10%-20%” lower in solar hours. The rule itself sets minimums: at least 1.2 times at peak for commercial and industrial consumers (1.1 times for others), and at least 20 per cent lower in solar hours for every category on ToD. A State Commission can set wider differences.
• The threshold is “more than ten Kilowatt”, not “10 kW and above”.
• The dates are deadlines for State Commissions, “not later than” dates. Actual implementation happens through each state's tariff order, and states are at different stages.

What does the 2026 draft amendment propose?

On 12 March 2026 the Ministry of Power published the draft Electricity (Rights of Consumers) Amendment Rules, 2026 for comment. It proposes that ToD for commercial and industrial consumers with maximum demand above ten kilowatts “shall be implemented no later than 1st April, 2027”, and for all other consumers, except agricultural consumers, no later than 1 April 2028. The peak and solar-hour differentials are reported to be unchanged.

Why is India moving to time-of-day pricing?

Because the cost of electricity now depends heavily on the hour. India's solar fleet produces a large surplus in the middle of the day. The demand left for other sources to meet — net demand — peaks after sunset, when solar output has gone. The Minister said in 2023 that the ToD tariff “will improve the management of renewable generation fluctuations, incentivize demand increase during the periods of high RE generation hours and thereby increase grid integration of larger quantity of renewable power.”

Wholesale prices show the gap clearly. A July 2026 working paper by the Economic Advisory Council to the Prime Minister, The Duck and The Camel: Tracing the Net Load on the Indian Power Grid, found that the average day-ahead price on the Indian Energy Exchange was ₹1.11 per kWh at 13:00 in May 2026, while the late-evening peak had risen from ₹8.08 to ₹9.71 between May 2023 and May 2026. These are exchange prices, given here as general market context — they are not retail tariffs. Its conclusion points to storage, “complemented on the demand side by time-of-day tariffs and demand response that move load toward the solar hours.” How businesses can take part in demand response is covered separately in this series.

The grid has been meeting that demand. On 25 April 2026, India met an all-time peak demand of 256.1 GW “without any shortage”, with solar supplying 21.5 per cent of the mix at that moment, according to the Ministry of Power. Demand went higher still in May. Aligning consumption with the hours of plentiful solar is one of the tools for ensuring reliable power while advancing climate commitments.

Who sets the ToD tariff for a business?

The State Electricity Regulatory Commission, in its tariff order for each distribution company. The central rule sets the floors and the deadline; the Commission decides the hours, the size of the rebate and surcharge, and how they apply within each consumer category. That division follows the Electricity Act's design, in which retail tariffs are a state responsibility — see India's power sector for how the institutions fit together.

As a result, ToD looks different from state to state. Three examples show the range:

The rates themselves are revised each year. For any specific site, the current tariff order is the only reliable source.

What does ToD change on an industrial bill?

ToD changes the energy charge. The meter records consumption in each time block, and each block is priced at its own rate. The rule is explicit that the ToD tariff applies to the “energy charge component of the normal tariff”; demand charges and other fixed components are set separately.

An illustration shows the mechanism. Take a site whose normal-hour energy rate is indexed at 100, with peak hours at 120 and solar hours at 80 — exactly the minimum differentials the rule sets for commercial and industrial consumers. Real rates in any state will differ.

The illustration makes one point: under ToD, when a site uses electricity matters, not just how much it uses. A site that already runs mostly in daylight gains; one that runs mostly in the evening pays more unless it adapts.

How can a business respond to ToD pricing?

The options fall into three groups.

1. Shift flexible load into solar hours. Batch processes, pumping, chilling, charging and other deferrable loads can often be scheduled into the cheaper window. This is usually the lowest-cost response.
2. Store daytime energy for the evening. On-site storage, or solar paired with battery storage, moves cheap midday energy into the expensive peak.
3. Match supply to the shape of demand. Renewable supply contracted through open access or a captive arrangement can be structured around the hours a site actually needs. wind-solar hybrid supply delivers across more of the day than solar alone, and firm and dispatchable renewable energy is built to deliver in the hours a buyer specifies.

One regulatory detail matters for renewable buyers. Some states tie banking of open access energy to ToD periods. Gujarat's green energy open access regulations of 2024, for example, allow energy banked in the peak (time-of-use) period to be used in peak or off-peak periods, while energy banked off-peak “shall be utilized only during off-peak period”. Check your state's regulations before valuing banked energy.

Smart meters are what make all this measurable. More than five crore had been installed across India by 31 December 2025, according to the Ministry of Power, and the 2023 rule requires ToD to be made effective for a consumer once a smart meter is installed.

What should a business do before its next tariff order?

1. Find out where your state stands. Check the current tariff order for your category's ToD periods and rates.
2. Get your load profile by time block. A smart or ToD meter already records it; the question is whether anyone is reading it.
3. Price the shift. Estimate what moving flexible load, or adding storage, would do to the average rate — using your state's actual rates, not the national floors.
4. Read renewable offers by the hour, not just the unit. A supply that delivers in solar hours competes with the cheapest block of your tariff; one that delivers in the evening competes with the most expensive.

ToD pricing is one of the ways India is aligning growth, sustainability and energy security in the transition era: it asks consumers to use more electricity when clean generation is plentiful, and rewards them when they do.

Frequently asked questions

What is the full form of ToD in electricity?

Time of Day. A ToD tariff prices electricity differently depending on the time block in which it is used.

Is ToD tariff mandatory for industrial consumers in India?

The 2023 rule required State Commissions to apply ToD to commercial and industrial consumers with maximum demand above 10 kW from a date not later than 1 April 2024. A draft amendment of March 2026 proposes 1 April 2027 instead; as at 30 September 2026 it had not been finalised. Implementation is through each state's tariff order.

What are solar hours in a ToD tariff?

Eight hours of the day, specified by the State Commission, during which the tariff for every consumer category on ToD, including commercial and industrial, must be at least 20 per cent below that category's normal rate.

What are peak hours in a ToD tariff?

The hours of highest demand, set by the State Commission or State Load Despatch Centre. For commercial and industrial consumers the peak tariff must be at least 1.2 times the normal rate, and peak hours cannot be longer than solar hours.

Does ToD change the demand charge?

No. The rule applies ToD to the energy charge component of the normal tariff; demand charges are set separately in the tariff order.

Does ToD apply to agricultural consumers?

The 2023 rule does not require it: agricultural consumers are excluded from the national mandate. A State Commission may still design its own tariffs for them.

What is a ToD meter?

A meter that records consumption separately for each time block so that each can be billed at its own rate. Smart meters record this by default.