MoP Draft Broadens Roles for Grid and Standalone Energy Storage

Energy Storage

The Ministry of Power (MoP) has proposed a draft amendment to Rule 18 of the Electricity Rules, 2005, aimed at providing legal clarity for Energy Storage Systems (ESS) by expanding the regulatory status and allowing consumers to become legitimate owners. As per the draft, “The Energy Storage System shall be utilized either as an independent energy storage system or as part of generation, transmission, or distribution”

The amendment expands the definition of “consumer,” placing them on par with generation companies (Gencos), transmission companies (Transcos), distribution companies (Discoms), system operators, and independent storage providers. It permits consumers, system operators, or independent energy storage service providers to develop, own, lease, or operate an ESS.

New Provisions Benefit Developers

The draft also allows ESS developers or owners to sell, lease, or rent out storage capacity—wholly or partially—to any consumer or utility engaged in generation, transmission, distribution, or to a Load Despatch Centre.

In addition, the draft clarifies rules for non-co-located ESS. “If such an Energy Storage System is not co-located but is owned and operated by a generating station, distribution licensee, or consumer, the legal status shall still be that of the owner. However, for scheduling, dispatch, and other operational matters, it shall be treated as a separate storage element,” the document states.

The MoP has invited public comments on the draft within 30 days of the letter, by July 10, 2025. Feedback can also be sent via email to ri-mop@gov.in.

ISTS Waiver Strengthens Policy Push for Energy Storage

The MoP’s latest draft follows a separate notification granting a 100% waiver of the inter-state transmission system (ISTS) charges for energy storage systems (ESS), supporting the integration of renewable energy. The waiver applies to pumped hydro and battery storage projects.

According to the notification, a 100% ISTS charge exemption will be available for hydro-pumped storage projects (PSPs) whose construction contracts are awarded on or before June 30, 2028. A similar 100% waiver will also apply to co-located battery energy storage systems (BESS) commissioned by the same date, provided the electricity is consumed outside the state of commissioning.

The move positions energy storage not just as a grid support mechanism but also as a commercial service, infrastructure layer, and consumer-facing opportunity.