Ministry of Power Proposes to Amend Rule 18 of Electricity Rules 2005 for Energy Storage Systems
The Ministry of Power has released draft amendments to Rule 18 of the Electricity Rules, 2005, proposing a regulatory framework which states that Energy Storage Systems (ESS) can be utilised either as independent energy storage system or as part of generation, transmission, or distribution.
June 12, 2025. By Mrinmoy Dey
According to the draft, ESS can function independently or be integrated with generation, transmission, or distribution networks, marking a significant shift in how storage is positioned in India's power ecosystem.
The draft outlines that ESS may be developed, owned, leased, or operated by a range of stakeholders, including generating companies, transmission or distribution licensees, consumers, system operators, or independent energy storage service providers. This expansive scope signals the government’s intent to democratise participation in energy storage and promote business model innovation.
Importantly, the ESS will inherit the legal status of its owner, allowing for regulatory clarity in its treatment under Indian electricity law. A key provision further clarifies that even when an ESS is not co-located with the asset it supports – such as a generation plant or distribution network, but remains owned and operated by it, it shall still retain the owner’s legal status.
However, for operational purposes like scheduling and dispatch, such ESS installations will be treated as independent storage elements.
Another progressive clause in the draft amendment provides the developer or owner of ESS the right to lease, rent, or sell storage capacity, either wholly or partially, to any consumer, utility, or Load Despatch Centre. This provision is likely to facilitate the emergence of storage-as-a-service models, enable capacity monetisation, and spur the growth of a competitive energy storage market in India.
The Ministry also sought stakeholders’ comments and suggestions by July 10, 2025.
The proposed changes are expected to play a crucial role in shaping policy around the integration, operation, and regulation of energy storage systems, which are increasingly seen as essential for grid stability, renewable integration, and peak demand management.
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