India BESS Revolution: Policy Push and Market Reforms for ESS

The battery energy storage system (BESS) has become a necessity for renewable power integration. Catering to this, the Union government has taken several policy, regulatory, and market measures to accelerate the development and deployment of energy storage technologies, like BESS and Pumped Storage Projects (PSPs)

As per the Ministry of Power, initiatives aim to address the intermittency of renewable energy, enhance grid stability, and ensure a reliable power supply as India advances toward its clean energy targets.

Enabling Renewable Integration and Grid Management

Pumped-hydro storage, BESS, and advanced grid-management systems are being developed to manage variability and provide essential ancillary services such as frequency control, voltage regulation, peak shifting, congestion management, and black-start support.

Under the Central Electricity Regulatory Commission (Ancillary Services) Regulations, 2022, energy storage systems are now eligible to provide Secondary Reserve and Tertiary Reserve Ancillary Services, enhancing real-time grid stability. 

Renewable Energy Management Centres (REMCs) have been set up nationwide for real-time monitoring, forecasting, and scheduling of renewable generation. The Automatic Generation Control (AGC) is being implemented to balance demand and supply dynamically.

Long-Term Planning Framework

The Central Electricity Authority (CEA) has projected an energy storage requirement of about 336 GWh by 2029-30 and 411 GWh by 2031-32 to enable reliable renewable integration. 

To support this, the government introduced Guidelines for Preparation of Resource Adequacy Plans (RAP) on June 28, 2023, ensuring adequate generation, storage, and demand-responsive resources to meet peak electricity demand. 

Together with the National Electricity Plan, the RAP framework provides a roadmap for scaling storage capacity and improving overall system reliability.

Policy and Regulatory Initiatives

A series of policy amendments and guidelines have been introduced to formalize energy storage as part of India’s power ecosystem. 

The Electricity Rules were amended in December 2022 to recognise ESS as an integral component of the power system, integrating them across generation, transmission, and distribution. 

In October 2022, ESS were included in the Harmonised Master List of Infrastructure by the Ministry of Finance, enabling access to longer-tenure, low-cost financing.

Further reforms include the National Framework for Promotion of Energy Storage Systems, issued in September 2023, which provides a roadmap for deployment, market integration, and regulation of storage technologies. 

The government has also released draft Technical Standards and Safety Regulations in 2025 to ensure uniform practices for safe and reliable BESS construction.

Market Development and Demand-Side Incentives

To improve the commercial viability of storage projects, the government has waived Inter-State Transmission System (ISTS) charges for co-located BESS commissioned and PSPs awarded up to June 2028. 

The Central Electricity Regulatory Commission (CERC) has also allowed storage resources to participate in ancillary service markets since January 2022.

Tariff-Based Competitive Bidding (TBCB) Guidelines, issued in March 2022, provide a transparent framework for BESS procurement by distribution licensees. Storage assets have also been permitted to participate in the High-Price Day-Ahead Market since March 2023, allowing them to respond to peak price signals. 

Additionally, consumers relying on diesel generators have been directed under amended Electricity (Rights of Consumers) Rules, 2020, to transition to cleaner energy-based backup systems, including BESS.

Two Viability Gap Funding (VGF) schemes launched in March 2024 and June 2025 target around 43 GWh of BESS capacity, accelerating early-stage project development and deployment.

Supply-Side and Manufacturing Support

The Ministry of Heavy Industries is implementing a Production-Linked Incentive (PLI) Scheme worth INR 18,100 crore to establish 50 GWh of advanced chemistry cell (ACC) manufacturing, with 10 GWh reserved for grid-scale storage applications. 

For PSPs, a grant of INR 1 crore per MW for the first 200 MW and INR 0.75 crore thereafter is being provided to strengthen enabling infrastructure.

To streamline project development, statutory concurrence from the CEA has been waived for closed-loop, off-stream PSPs. Amendments in September 2025 have also permitted energy storage systems to be developed, leased, or operated by consumers, expanding ownership and participation models. 

In addition, the CEA issued an advisory in February 2025 recommending co-location of energy storage with solar power projects, encouraging at least 10 percent storage capacity of the total solar installation for a minimum of two-hour duration.