After labour, electricity is the largest line item on a cold-storage P&L. For a frozen high-bay running on ammonia, electricity can hit 18 to 24 percent of operating cost. For a refrigerated DC with high throughput, it lands around 12 to 16 percent. Either way, the contract structure matters as much as the rate, and most operators do not negotiate the structure as hard as they should.
Three structures dominate the Indian HT industrial market. Fixed-rate, time-of-day, and open access. Here is when each one is the right call.
Fixed-rate (utility tariff)
A standard Gujarat HT industrial tariff prices per-kWh at a published rate that adjusts via fuel adjustment surcharge but is otherwise stable. The operator pays the published rate plus surcharge. The utility carries the wholesale price risk and prices it into the schedule.
Fixed utility tariff is the right call when the operator wants predictable budgeting, when the open-access market in the state is uncertain or has high wheeling charges, or when the customer book is on fixed-rate cold-storage agreements and any electricity volatility would erode margin directly.
The downside is that you pay a premium for the certainty. In a falling market, fixed tariff looks expensive within six months and stays expensive for the year.
We are on the standard Gujarat HT industrial tariff at Mehsana for the first year of operation, with an open-access review planned for year two.
Time-of-day (ToD)
Time-of-day pricing splits the day into peak, off-peak, and shoulder windows, with different per-kWh prices in each. The operator can run flexible load (battery charging, blast freezer pre-cool, ice production) in off-peak windows and reduce exposure in peak windows.
ToD is the right call when the operator has financial discipline to schedule flexible load against the price signal, when the customer book has rate-card flexibility that allows pass-through of energy timing, or when the facility has battery storage to shift consumption windows.
The downside is real volatility. A summer demand spike on a hot Ahmedabad afternoon can push peak rates meaningfully above off-peak, and a refrigeration load running through those hours will feel it on the monthly bill.
We will move to ToD at Mehsana once the battery storage scoped for 2028 is commissioned. Until then, the savings do not justify the operational complexity.
Open access
Open access lets a large industrial consumer buy electricity from a third-party generator across state borders, paying wheeling and cross-subsidy surcharges to the state utility for use of the transmission network. The structure can deliver meaningfully lower per-kWh rates, particularly for renewable contracts.
Open access is the right call when the wheeling and cross-subsidy charges in the state are not punitive, when the operator can sign a long-term PPA with a generator, or when carbon reporting matters for customer audits.
The downside is regulatory complexity. The open-access framework in India shifts with state-level policy changes, and a contract that worked one year can become uneconomic the next.
A 5 MW open-access PPA for Mehsana is in modelling for year three of operations, paired with the rooftop solar Glacier Energy is scoping. The combination could cover roughly 45 percent of annual demand on renewables.
Three negotiation points often missed
Regardless of structure, three negotiation points matter and often get missed.
First, the maximum demand charge. Indian HT tariffs include a kVA demand charge based on the highest 15-minute average draw during the billing month. For a cold-storage operation, a single uncoordinated start-up of refrigeration plants can spike the demand charge for the whole month. Negotiate the contract demand carefully, and run sequenced plant starts to avoid the spike.
Second, the renewable add-on. Some retailers and the SECI green tariff route offer renewable energy certificates and green tariff power. Some operators want the RECs for carbon reporting. The market varies wildly by state, so price these separately and do not let them be bundled into the headline rate without a clear cost breakdown.
Third, the contract demand flexibility. Cold-storage facilities sometimes change refrigeration plant capacity or close rooms, which materially shifts the load. A contract with no flexibility to adjust the committed demand is a contract that will hurt if operations change.
Where the industry is heading
The next five years are going to push more Indian cold-storage operators toward ToD or open-access structures, paired with battery storage and demand response participation. The math favours operators who can shift load away from peak hours, and battery storage makes that shift possible without operational disruption to refrigeration.
We have battery storage scoped at Mehsana for 2028. The case is straightforward: smooth the demand charge, shift load to off-peak windows, and protect the compressor restart sequence during Gujarat grid outages. The technology has reached the point where the project economics work without subsidies in most Indian HT markets.
That is the conversation cold-storage CFOs should be having with their treasury teams this year, not next.