CERC’s New Draft Opens the Door for Integrated Energy Storage Systems in India’s Tariff Framework Published 2025-12-11 08:48:00 By Anupam Nath India is rapidly transitioning toward a flexible and sustainable energy future, and the Central Electricity Regulatory Commission (CERC) has just taken a major policy step to accelerate that change. On December 1, 2025, the Commission released its draft “Terms and Conditions of Tariff (Second Amendment) Regulations, 2025”, a document that formally introduces Integrated Energy Storage Systems (ESS) into the tariff structure for both thermal power plants and interstate transmission systems.This move represents a defining moment in India’s regulatory evolution — one that acknowledges storage as a key enabler of grid stability, renewable integration, and cost optimization. For decades, tariffs were primarily calculated based on conventional power generation metrics. Now, with the inclusion of storage systems, the framework expands to reflect a more dynamic and cleaner energy mix.Understanding the Draft ProposalThe proposed amendment outlines how storage projects — when integrated with coal, lignite, or gas-based power plants, or linked to transmission lines — can be treated as part of the regulated asset base. Entities commissioning a storage unit will be required to apply for a supplementary tariff within 30 days of the system’s commercial operation.The tariff will include two components:Fixed storage charges based on the annual fixed cost of the ESS.Supplementary energy charges reflecting the cost of electricity consumed during charging, adjusted for round-trip efficiency and auxiliary consumption.Power used for charging can be drawn from the host generating unit, other stations, or even the open market — providing much-needed operational flexibility.Norms and Performance MetricsCERC has established clear operating norms for these systems. The normative plant availability factor is set at 90%, with 85% round-trip efficiency and 5% auxiliary consumption. Operation and maintenance expenses are fixed at 2% of the capital cost, with a 5.25% annual escalation for the first two years.A base return on equity of 14% has been proposed, treating storage capacity as part of additional capitalization — a development that could significantly boost investor confidence.Why It MattersThe inclusion of ESS within tariff regulations sends a clear signal to investors, developers, and utilities: battery storage is now an integral part of India’s power ecosystem. It bridges the gap between renewable intermittency and round-the-clock power availability.By creating a transparent mechanism for cost recovery and performance accountability, the CERC initiative encourages large-scale adoption of storage technologies — from lithium-ion batteries to emerging chemistries. This could also open new revenue streams for utilities offering ancillary services or market-based energy balancing.What’s NextStakeholders have been invited to submit comments on the draft until December 30, 2025. A public hearing via video conference is scheduled for January 2, 2026. The move strengthens India’s commitment to a cleaner, modern, and more resilient power sector — with storage as the backbone of its next growth phase.
