The Central Electricity Regulatory Commission has released a draft notification dated 1 December 2025 proposing a second amendment to the Terms and Conditions of Tariff Regulations, 2024. The draft focuses on introducing a comprehensive framework for the treatment of integrated energy storage systems within existing generating stations and transmission systems in India. The proposed changes have been issued under the powers granted to the Commission under Sections 178 and 61 of the Electricity Act, 2003. According to the draft, the amendments will take effect from the date of publication in the Official Gazette, except for the changes to Regulations 51 and 52, which will apply retrospectively from 1 April 2024.
A major feature of the draft is the introduction of detailed definitions and operational norms for the functioning of integrated energy storage systems. These include terms related to battery cells, state of charge, round-trip efficiency, auxiliary consumption, and plant availability factor. New regulatory terms, such as declared capacity of energy storage systems and maximum continuous rating, have also been added. These definitions aim to give clarity on how energy storage assets will be treated for tariff determination and how they will operate within the power grid. The Commission aims to create a transparent and structured approach for integrating storage systems into the energy sector.
The draft mandates that generating companies and transmission licensees installing integrated energy storage systems must apply for supplementary tariff determination within 30 days of the commercial operation date. The supplementary tariff will be calculated separately and include components for fixed storage charges and energy charges. The framework provides formulas for computing annual fixed cost, return on equity, depreciation, and working capital requirements related to storage assets. It also explains how supplementary energy charges will be calculated depending on the source of electricity used to charge the storage system, whether from the associated generating station, another generating station, the grid, or the open market.
To ensure performance accountability, the draft introduces clear norms for operation. The normative availability factor is proposed at 90 percent, round-trip efficiency at 85 percent, and auxiliary consumption at 5 percent. It also proposes an incentive of 25 paise per kilowatt-hour for energy discharged beyond the level corresponding to normative round-trip efficiency. Beneficiaries will have the first right to discharge stored energy, except in situations where grid safety considerations require different actions. Procedures for scheduling, dispatch, and energy accounting will be prepared by Regional Power Committees to ensure standardized operations across the system.
The draft also includes guidelines for additional capitalization related to energy storage assets. Companies will be required to justify technology selection, cost-benefit analysis, phased expenditure, and impact on consumer tariffs before approval. Approved expenditure will be included in the supplementary tariff computation after prudence checks. For transmission systems, special conditions address grid reliability, transmission deferral benefits, and using storage assets for other business applications.
The Commission has also amended tariff filing forms to include detailed technical information such as battery rack and module numbers, C-rate, cycle life, response time, and information on energy management systems. This will help ensure transparency and accurate tariff assessment. A special regulatory sandbox provision has been included, allowing innovation and research projects with extra cost support of up to 0.5 percent of annual fixed cost or ₹100 crore. These extensive revisions mark an important step toward mainstreaming energy storage in India’s regulatory and tariff framework.
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