India's CERC issues draft framework integrating energy storage into tariff regulation

India's Central Electricity Regulatory Commission issued a draft framework for Integrated Energy Storage Systems on December 1 2025, resolving a decade-long regulatory vacuum by recognising storage as a regulated asset. The certainty unlocks utility-scale investment essential for managing India's renewable expansion toward its 500 GW non-fossil capacity target and reducing grid-instability risk.

The Central Electricity Regulatory Commission (CERC) issued a draft framework for Integrated Energy Storage Systems (IESS) on December 1 2025, presented as the Terms and Conditions of Tariff (Second Amendment) Regulations, 2025. It resolves a decade-long regulatory vacuum on pricing, operation, and compensation of energy storage by recognising storage as a regulated asset across generating stations and the inter-state transmission system. The framework specifies normative benchmarks including 85 percent round-trip efficiency, 90 percent availability, and a 12-year depreciation schedule for battery assets, and establishes a 50:50 revenue-sharing mechanism between generators and beneficiaries.

The framework affects storage developers, utilities, transmission licensees, financial institutions, and end consumers. It provides supplementary tariff mechanisms allowing fixed storage charges and energy charges, filed within 30 days of commercial operation for rapid financial visibility. Normative benchmarks let lenders assess storage akin to conventional infrastructure. IESS may charge from multiple sources including the host plant, other generators, the grid during favourable frequency periods, or the open market, supporting multi-use business models. Transmission licensees may install grid-side storage, with revenues channelled back to reduce annual transmission charges, benefiting consumers.

Storage developers and utilities should prepare to file fixed storage charges and energy charges within 30 days of commercial operation and align project economics with the 50:50 revenue-sharing mechanism for gains exceeding fixed and variable costs. Developers should monitor the Regulatory Sandbox enabling testing of innovative storage technologies and business models. The framework directly supports India's target of 500 GW non-fossil fuel capacity by unlocking utility-scale storage investment essential for managing high renewable penetration and reducing grid-instability risk across the power sector.

Key figure — Operational benchmarks: 85 percent round-trip efficiency, 90 percent availability, 12-year depreciation