CERC Notifies Tariff Amendment Bringing Energy Storage Systems Under Regulatory Framework

The Central Electricity Regulatory Commission (CERC) has issued a notification for the Terms and Conditions of Tariff (Second Amendment) Regulations, 2026, bringing Integrated Energy Storage Systems (IESS) under the country’s formal tariff structure to accelerate adoption and strengthen grid reliability.

The amendment recognises IESS as part of  , allowing deployment alongside generating stations or transmission assets to store and dispatch electricity as needed, improving grid flexibility and reliability. The regulations also note that such systems can help defer or avoid the need for additional transmission infrastructure.

Under the framework, lithium-ion battery-based systems have been explicitly included as part of IESS, with a defined useful life of 15 years, providing clarity on asset planning and cost recovery.

To govern financial aspects, the Commission has introduced a supplementary tariff mechanism for integrated storage systems. Generating companies and transmission licensees are required to file tariff petitions within 90 days from the date of commercial operation. The tariff structure includes Supplementary Fixed Storage Charges, covering annual fixed costs with a base return on equity of 14 percent, and Supplementary Energy Charges, which account for the cost of electricity used for charging, adjusted for a minimum round trip efficiency of 85 percent and auxiliary consumption.

The amendment also provides flexibility in sourcing power for charging storage systems, allowing entities to utilize surplus generation, procure electricity from other sources, or purchase power from the open market. It further prioritises the use of storage systems to maintain the technical minimum operation of generating units, ensuring stable supply to beneficiaries.

For existing projects, a consultative approach has been prescribed. Generating companies proposing to add storage systems must share details with beneficiaries, who are given 30 days to respond before the proposal is submitted to the Commission for in-principle approval.

In addition, the regulations introduce provisions related to integrated coal and lignite mines, including a gain-sharing mechanism for production exceeding planned levels and clarification on input fuel cost treatment. While most provisions come into force upon notification, certain mine-related clauses have been made effective retrospectively from April 1, 2024.

The amendment marks a step toward integrating energy storage with conventional power systems, with the aim of improving grid efficiency and reliability.