Third-Party Open Access PPA: What to Negotiate & Escrow Terms

Q: Are there any tax benefits for me in a PPA?

No. Since you do not own the asset, you cannot claim [Accelerated Depreciation](/blog/solar-tax-benefits-gst-depreciation-hsn-code-india). However, 100% of your PPA payments are deductible as business operating expenses.

Published Tue Jun 16 2026 · Updated Thu Jul 02 2026

Third-Party Open Access PPA: What to Negotiate & Escrow Terms — third party open access PPA | Bridgeway Solar Delhi NCR

> **Quick Summary** > - **Model Type:** Third-Party Open Access (OPEX/PPA) > - **Upfront Cost:** Zero (Zero Capex) > - **Typical Tariff:** ₹4.00 – ₹5.00 per unit (Grid parity savings of 40–50%) > - **Ideal For:** Commercial & Industrial (C&I) units with monthly bills >₹5 Lakhs > - **Contract Tenure:** 10 – 25 years

As electricity tariffs in India continue to climb, businesses in Delhi NCR and beyond are looking for ways to de-risk their operational expenses. For a factory in Noida or a commercial complex in Gurgaon, the grid tariff often touches ₹9–₹10 per unit once all surcharges are included. This is where a **third party open access PPA** (Power Purchase Agreement) becomes a game-changer.

Unlike a rooftop solar installation where you own the assets, a third-party PPA allows you to buy solar power from an off-site solar park or a developer-owned rooftop system at a fixed, lower rate with zero upfront investment. However, because these contracts span decades, the "fine print" in your PPA can mean the difference between massive savings and legal headaches.

At Bridgeway Power, with our 35+ years of experience, we’ve helped over 5,000+ customers navigate these complex agreements. In this guide, we break down exactly what you must negotiate in a third-party open access PPA and how to structure escrow terms to protect your business.

## What is a Third-Party Open Access PPA?

A Third-Party Open Access PPA is a tripartite arrangement between a Power Developer (Seller), a Consumer (Buyer), and the DISCOM (Utility). Under this model, the developer invests in the solar plant, and the consumer agrees to purchase the generated electricity for a long-term period.

In India, this is usually executed under the **OPEX/RESCO model**. You don't pay for the panels, the mounting structures, or the maintenance; you simply pay for the units consumed, much like your current electricity bill, but at a significantly lower rate.

### Comparison: Capex vs. Third-Party PPA (2026)

## Top 5 Clauses to Negotiate in a Third-Party Open Access PPA

When entering a **third party open access PPA**, the following five areas are where most negotiations fail or succeed.

### 1. The Tariff Structure: Fixed vs. Escalating Most developers offer a lower starting tariff (e.g., ₹4.00) with a 2-3% annual escalation. However, in a high-inflation economy, a flat tariff for 25 years might be more beneficial for the consumer. * **Negotiation Tip:** Request a "Grid-Linked Tariff" or a "Fixed Tariff." If you accept escalation, ensure it is capped and does not exceed 75% of the projected DISCOM tariff hikes.

### 2. Lock-in Period & Early Exit Most PPAs have a lock-in period of 10–15 years. If your business relocates or the building is sold, exiting the PPA can be expensive. * **Negotiation Tip:** Negotiate a "Buy-out Option" where you can purchase the system at a depreciated value after Year 7 or Year 10.

### 3. Minimum Guaranteed Generation (Performance Guarantee) In a PPA, you only pay for what is produced. However, if the developer installs low-quality panels that degrade quickly, you may not get enough power to cover your needs. * **Negotiation Tip:** Demand a CUF (Capacity Utilization Factor) guarantee. If the system produces less than the agreed units (after accounting for weather), the developer should compensate you for the "Loss of Savings."

### 4. Billing & Settlement Cycles With recent changes by the Ministry of New & Renewable Energy, virtual net metering and banking rules have become stricter. In states like Delhi, the DERC regulates how many solar units can be "banked" for later use. * **Negotiation Tip:** Ensure the PPA account for banking charges and cross-subsidy surcharges. Clearly define who bears the cost if the government increases these surcharges mid-contract.

### 5. Buy-Back and Transfer of Ownership At the end of the 25-year term, what happens to the panels? * **Negotiation Tip:** The agreement should clearly state that ownership transfers to the consumer for ₹1 after the term expires.

## Escrow Terms: Protecting the Developer and Consumer

In a **third party open access PPA**, the developer is taking a massive financial risk by installing crores of rupees worth of equipment on your site. To mitigate this, they often require an **Escrow Account**.

### What is a Solar PPA Escrow? An escrow account is a neutral bank account where the consumer deposits a security amount (usually 2-3 months of projected energy bills). If the consumer defaults on payment, the developer can withdraw funds to cover their losses.

### Crucial Escrow Terms to Review: * **The Default Trigger:** Clearly define what constitutes a "default." Is it one missed payment? Or 60 days of non-payment? * **Fund Replenishment:** If the developer draws from the escrow, how much time does the consumer have to replenish it before the power is disconnected? * **Interest Earned:** Since the consumer’s money is sitting in the account, ensure the contract specifies that any interest generated belongs to the consumer.

## Calculating the Savings: Commercial Surcharges (2026)

If you are a commercial consumer in Delhi, your bill isn't just "Units x Rate." It includes the PPAC Surcharge and Pension Trust Surcharge.

### Commercial & Industrial Grid Tariff vs. PPA (Delhi/NCR)

| Component | Grid Electricity (Typical) | Third-Party PPA Solar | | :--- | :--- | :--- | | Base Energy Charge | ₹8.00 | ₹4.50 | | PPAC (Avg 17%) | ₹1.36 | ₹0.00 | | Electricity Tax (5%) | ₹0.40 | ₹0.00 | | **Total Landed Cost** | **₹9.76 per unit** | **₹4.50 per unit** |

*Note: PPA Solar usually bypasses state taxes and PPAC, leading to a saving of over ₹5 per unit.*

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## Open Access Charges: The "Hidden" Costs While the solar energy itself is cheaper, "transporting" it from an off-site park to your factory in Faridabad or Ghaziabad involves several charges determined by the state DISCOMs like BSES or PVVNL.

1. **Transmission Charges:** Cost of using the high-voltage grid. 2. **Wheeling Charges:** Cost of using the local distribution lines. 3. **Cross-Subsidy Surcharge (CSS):** A fee paid to the DISCOM to compensate them for losing a high-paying commercial customer. 4. **Additional Surcharge:** To cover the DISCOM's "stranded" power purchase costs.

Learn more about CSS and Additional Surcharges here.

## Real-Life Example: A Pharma Plant in Faridabad A pharmaceutical manufacturing plant in Faridabad was paying an average monthly bill of ₹12 Lakhs at ₹9.20/unit. They entered into a **third party open access PPA** for an 800kWp off-site solar allocation.

* **PPA Tariff:** ₹4.80 (Fixed for 15 years) * **Open Access Charges:** ₹1.40/unit * **Landed Solar Cost:** ₹6.20/unit * **Net Savings per Unit:** ₹3.00 * **Monthly Savings:** ₹3,00,000 (Approx 25% Reduction in Opex) * **Upfront Investment:** ₹0

This allowed the plant to reinvest ₹36 Lakhs annually into new machinery without taking on any debt.

## Why Bridgeway Power is Your Ideal Partner While we are experts in commercial solar loans, we also bridge the gap for businesses looking for the PPA route. We have a vetted panel of investors and developers. Our 35-year legacy ensures that the equipment being installed on your roof or allocated to you off-site is of the highest tier—preventing the common generation losses seen in cheap installations.

We also offer specialized Solar AMC plans specifically for PPA assets to ensure the developer maintains the system at peak efficiency.

## Frequently Asked Questions

### What is the minimum bill required for a third-party open access PPA? Usually, developers look for a minimum monthly electricity bill of ₹5 Lakhs or a connected load of at least 100kW to make the project financially viable due to the administrative costs of open access.

### Who is responsible for solar panel cleaning in a PPA? In a standard OPEX/PPA model, the **developer** is responsible for all panel cleaning and maintenance. However, it is vital to audit their performance to ensure dust and soiling aren't reducing your promised savings.

### What happens if the developer goes bankrupt? This is a critical negotiation point. Your PPA should include a "Step-in Right," allowing the consumer or a new third party to take over the operations of the plant so that your power supply remains uninterrupted.

### Can I do a PPA if I am located in a rented building? Yes, as long as you have a long-term lease (usually 10+ years) and the landlord provides a No Objection Certificate (NOC) for the solar installation or off-site power procurement.

### Are there any tax benefits for me in a PPA? No. Since you do not own the asset, you cannot claim Accelerated Depreciation. However, 100% of your PPA payments are deductible as business operating expenses.

## Conclusion

A **third party open access PPA** is one of the most effective ways for Indian businesses to hedge against rising energy costs without touching their capital reserves. However, the success of the project relies on transparent escrow terms and a rigorously negotiated PPA.

Don't sign a 25-year contract without expert vetting. **Contact Bridgeway Power today for a free consultation** and let our 30+ member team of engineers and legal experts review your solar proposal.

Check your potential savings now with our Solar Calculator.",excerpt: