The Central Electricity Regulatory Commission (CERC) has introduced a draft notification titled “Terms and Conditions of Tariff (Second Amendment) Regulations, 2025,” aimed at integrating energy storage systems into India’s power infrastructure. Released on December 1, 2025, the draft focuses on the inclusion of integrated energy storage systems, or IESS, into existing coal, lignite, or gas-based power plants and inter-state transmission networks. The move is intended to enhance grid reliability, support operational flexibility, and defer investments in transmission infrastructure.
A key aspect of the amendment is the definition and regulation of integrated energy storage systems. These systems are co-located with power plants or transmission networks and are designed to store and release electricity efficiently to stabilize the grid. The regulations set technical benchmarks for these systems. The round-trip efficiency, which measures the energy retained after storage and retrieval, is fixed at a normative level of 85 percent. Auxiliary energy consumption, representing energy used for operating the storage system, is capped at 5 percent. The draft also assigns a useful life of 12 years for battery energy storage systems.
The draft notification lays out a financial framework through the introduction of supplementary tariffs. These include both supplementary fixed storage charges and supplementary energy charges. The annual fixed cost for an energy storage system will include a return on equity set at a base rate of 14 percent for additional capitalization in existing generating stations. The supplementary energy charge is designed to account for the cost of electricity used for charging, adjusted for the system’s round-trip efficiency and auxiliary energy consumption. Charging can be carried out using energy from the associated generating station, other stations, or purchased from the open market.
For implementation, the regulations require generating companies and transmission licensees to file petitions for supplementary tariffs within 30 days of the system becoming commercially operational. They are also required to share detailed proposals with beneficiaries or regional power committees. These proposals must include a comprehensive cost-benefit analysis and technology specifications before undertaking any additional capitalization for energy storage systems.
Operational norms are strictly defined to encourage efficiency and reliability. The normative annual plant availability factor for an integrated energy storage system is set at 90 percent. To further promote efficiency, the draft includes an incentive of 25 paise per kilowatt-hour for excess discharge of energy beyond the normative round-trip efficiency. Beneficiaries of the power system hold the first right of discharge from the storage system, ensuring that stored energy primarily serves those whose tariffs are regulated by the Commission. Additionally, any net gains generated from providing storage services to third parties or the open market will be shared equally between the generating company and its beneficiaries in a 1:1 ratio.
Overall, the draft regulations represent a significant step in integrating energy storage systems into India’s power sector. By setting technical, operational, and financial guidelines, the Commission aims to encourage the deployment of storage systems alongside existing generation and transmission infrastructure. The move is expected to improve grid stability, enhance operational flexibility, and support the efficient utilization of renewable and conventional energy resources. The regulations also provide a clear framework for financial viability, ensuring that both generating companies and beneficiaries benefit from energy storage services. This initiative marks a major development in India’s ongoing efforts to modernize its electricity grid and incorporate advanced technologies to meet growing energy demands.
The regulations are now open for feedback from stakeholders before being finalized, signaling a collaborative approach to shaping the future of energy storage in India’s power sector.
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