CERC Proposes Detailed Tariff Framework For Integrated Energy Storage Systems

The Central Electricity Regulatory Commission (CERC) has issued a draft notification proposing amendments to several provisions of the CERC (Terms and Conditions of Tariff) Regulations, 2024. Through these changes, the regulator plans to introduce a detailed tariff framework for integrated energy storage systems (ESS) attached to coal, lignite, gas-based generating stations and inter-State transmission systems.

Here are some of the key takeaways from the draft regulation framed by the central power regulator:

1. Applicable to whom?

As per the latest amendment proposed by CERC, named the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) (Second Amendment) Regulations, 2025, these regulations will be applicable to certain categories of generating stations and transmission companies.

The existing regulations apply in all cases where a generating company has an arrangement for the supply of coal or lignite from integrated mines allocated to it, for one or more of its specified end-use generating stations whose tariffs are determined by the Commission. They do not apply to generating or transmission stations whose tariffs are discovered through competitive bidding.

However, the latest amendment said, “These regulations shall also apply in all cases where the coal or lignite or gas-based generating station or inter-state transmission system, installs for storage and supply of electricity from the integrated energy storage system, for the use of the beneficiaries or the designated ISTS customers, as the case may be, whose tariff is required to be determined by the Commission under section 62 of the Act read with section 79 thereof.”

2. Compliance timelines

CERC said that these regulations will come into effect from the date of notification of these regulations in the official gazette, except for amendments in Regulations 51 and 52. It thus implies that this will come into force only after the central power regulator hears the stakeholders over its proposals laid out in this draft paper and after it comes out with a final version.

On the other hand, Regulation 51 deals with adjustment on account of shortfall of Overburden Removal (OB Adjustment) related to the mine developer. Regulation 52 deals with the adjustment on account of shortfall in GCV (GCV Adjustment).

3. Definition of an integrated energy storage system

The new regulations have also defined the meaning of integrated ESS to bring more clarity to its application. The new regulations propose to include the definition under a new section 3A.

It said, “Integrated energy storage system’ means the energy storage system co-located with the generating station or the transmission system, as the case may be, connected to a common bus-bar, including a dedicated line, if any, and for the purpose, including safe and reliable operation of the grid or for deferring the transmission investment and for enhancing the flexible operation of the generating station, as the case may be, as per the requirement of the National Load Despatch Centre or beneficiaries or the designated ISTS customers, as the case may be.”

4. CoD of integrated BESS

CERC also clarified the date of commercial operation (CoD) of integrated BESS and how this will be calculated. It said, “The date of commercial operation of the integrated energy storage system installed in an existing generating station or the transmission system shall be declared by the generating company or the transmission licensee, in accordance the Chapter 5 of the Grid Code, except where the integrated energy storage system is commissioned along with the new generating station or new transmission system as a part of the original scope.”

5. Supplementary tariff petition for ESS

CERC said that interested parties willing to install ESS need to file a separate supplementary petition before CERC for its approval.

It said, “The generating company or transmission licensee shall apply for the determination of a supplementary tariff for an integrated energy storage system installed in a coal, gas, or lignite-based thermal generating station or transmission system, as the case may be, in accordance with these Regulations, not later than 30 days from the date of commercial operation of such integrated energy storage system.”

6. Charges for integrated BESS

CERC has proposed to add clause 5(a) after clause 5 under Regulation 8 to address the supplementary energy charge for ESS.

It said, “Supplementary energy charge of the integrated energy storage system shall be computed based on the energy charge rate of the electricity sourced from the associated generating station or the tariff of the electricity procured for charging the integrated energy storage system based on sources other than the associated generating station, as the case may be, adjusted for the round-trip efficiency of the integrated energy storage system.”

7. Mandate for gencos for additional capitalisation for ESS

The CERC amendments also talked about sharing the proposal with the beneficiaries and filing a petition for approval before undertaking such additional capitalisation. It asked the gencos to include details of the proposed technology, scope of the work, estimated completion cost and other details, along with the computation of the indicative impact on the tariff for the relevant stakeholders.

The new draft amended regulations said, “After completion of the implementation of the integrated energy storage system, the generating company shall file a petition for the determination of a supplementary tariff for the integrated energy storage system. Any expenditure incurred or projected to be incurred and admitted by the Commission after a prudence check based on the reasonableness of the cost shall form the basis of the determination of the tariff.”

8. Mandate for transmission system owners for ESS

One notable provision in the amended norms is the recognition of transmission system owners implementing energy storage systems for grid balancing. The regulations said that the transmission licensee must share its proposal with the concerned Regional Power Committee, Central Transmission Utility, and the concerned Regional Load Despatch Centre.

It also asked the Central Transmission Utility (CTU) and the concerned Regional Load Despatch Centre to submit their recommendations to the concerned transmission licensee. CERC also said under what conditions it would approve the integrated ESS installation in such cases.

It said, “The integrated energy storage system for exclusive use of strengthening reliability of the grid operation or deferring investment of the transmission system or efficient operation of the power system, where the cost will be recovered through CERC (Sharing of transmission charges) Regulations, 2020; Provided that where the integrated energy storage system is to be installed to provide storage services as other businesses, the same will be governed through the Central Electricity Regulatory Commission (Sharing of Revenue Derived from Utilization of Transmission Assets for Other Business) Regulations, 2020.”

It also added, “The integrated energy storage system may be partly used for reliability of the grid operation or deferring investment as per clause (a) above or any other purpose as may be approved by the Commission.”

9. O&M of integrated ESS

The amended draft regulations of CERC also discussed the Operations and Maintenance (O&M) cost of the integrated ESS.

It said, “The operation and maintenance expenses on account of integrated energy storage systems in coal or lignite-based thermal generating stations or the transmission system, as the case may be, shall be 2% of the admitted capital expenditure (excluding IDC and IEDC) as on the date of commercial operation, which shall be escalated annually @ 5.25% during the first two years of operation;”

10. Aggregate cost of power used for charging ESS

The CERC regulations also talked about the aggregate cost of charging for these ESS. It said that the cost of charging integrated ESS for supplementary energy charges should be:

“Energy charges of the generating station if such energy is sourced from the surplus generation of the same generating station; b) Energy charges of such other generating station from where the energy is sourced for charging the integrated energy storage system from the share of the same beneficiaries of the generating station where the integrated energy storage system is installed; and c) Aggregate cost of electricity (fixed charges, energy charges and any other) used for charging of the integrated energy storage system of the generating station if such energy is sourced from another generating station or the market price of electricity procured from the open market.”