Uttarakhand Updates Renewable Tariff Rules, Opens Path for BESS Projects

Uttarakhand Electricity Regulatory Commission (UERC) has issued the Second Amendment Regulations, 2025, revising tariffs and other terms related to renewable energy supply and Battery Energy Storage System (BESS) projects. The provisions apply to projects commissioned after the regulations come into effect.

The regulation extends its applicability to all electricity supplied from Renewable Energy–Based Generating Stations or Battery Energy Storage Systems (BESS). It seeks to benefit distribution licensees and local rural grids within Uttarakhand.

The regulations also empower DISCOMs to decide the location and benefits of BESS projects based on a scientific study identifying suitable regions. They set the tariff for solar thermal and solar PV generating stations at a normative levelised tariff of 12 paise/unit over and above the generic tariff for these generating stations.

For existing BESS projects, the regulation stated, “These Regulations would not be applicable for generating stations commissioned before the coming into effect of these regulations, and their existing tariffs would continue to be applicable.”

It also set the levelised Rate of Fixed Charges (RFC) for BESS projects at a gross tariff of ₹5.78/kWh, with the corresponding net tariff determined after accounting for the cost of charging power and applicable adjustments.

Additionally, the provision gives existing projects that are currently supplying power to a third party the option to switch to supplying power to the distribution licensee or the local rural grid at the generic tariff applicable at the time of their commissioning, or to seek a project-specific tariff from the Commission. This option will apply for the remaining life of the project and cannot be changed once exercised.

Generic Tariff for Solar, Wind, and BESS Projects

The regulation sets the framework for future Wind, Battery Energy Storage System, Solar PV and Solar Thermal projects by defining a generic tariff with a maximum tariff. Distribution licensees, either directly or through an agency, may invite tariff-based competitive bids from generators or developers for procuring power or BESS services.

Solar PV on Canal Bank, Canal Top & Ground-Mounted Solar Plants

UERC also laid down provisions for implementing Canal Bank, Canal Top and ground-mounted solar power plants by government organisations through developers. In such cases, PPAs for the sale of power from these plants will be signed with the distribution licensee.

Eligible government organisations may receive a 4% margin on the tariff quoted by the L1 bidder for resources employed; however, the tariff plus the 4% margin must not exceed the generic tariff determined by the Commission for the year of commissioning.

Case for the BESS System in Uttarakhand

Uttarakhand is creating provisions to develop Battery Energy Storage Systems (BESS) using technologies such as lead-acid, lithium-ion, solid-state batteries, flow batteries, nickel-cadmium and others. These systems will store chemical energy and deliver it as electricity, including ancillary grid support services.

It lays down the following guidelines for setting up BESS projects:

• The useful life of a BESS project is set at 12 years, with an option for a five-year extension. For the extended period, the tariff would be 50% of the original tariff.

• It creates scope for technological intervention or innovation. In cases involving changes in the useful life or extended life of BESS, the Commission may determine the same.

• To manage depreciation for BESS projects, the regulation sets the depreciation rate for the first 15 years of the Tariff Period at 4.67% per annum, and the remaining depreciation will be spread over the remaining useful life of the project from the 16th year onwards, considering a salvage value of 10% of the project cost. A rate of 7.50% per annum shall be considered for the useful life of the Battery Energy Storage System after considering the salvage value of 10% of the project cost.

Working Capital Provision

The regulation also includes provisions on working capital requirements for Wind, Small Hydro, Solar PV, Canal Bank, Canal Top Solar PV, BESS, Solar Thermal, and GRPV/GSPV power projects.

1. The Canal Bank Solar PV Plant will have a capital cost of Rs. 322.00 lakh/MW, while the Canal Top Solar PV Plants will have a capital cost of Rs. 343.00 lakh/MW. Both projects will be covered under O&M expenses of Rs. 16.24 lakh/MW.
2. For BESS projects commissioned after the notification date, the capital cost is set at Rs. 250 lakh/MWh.
3. UERC will allow 1.25% of capital cost for the first year and an escalation of 5.72% per annum over the tariff period, with a normative availability of 95% per year.

The regulation also mentioned that preferably, BESS will operate on two complete charge–discharge cycles per day for optimal utilisation.

The distribution licensee, in consultation with SLDC, must prepare a detailed procedure covering the cost of charging power, scheduling, charge–discharge operations and location, and submit it to the Commission within three months of notification.