⚡ Quick Read
- What happened: The CERC has amended its 2026 tariff regulations to formally include integrated energy storage systems co-located with thermal plants and ISTS.
- Why it matters: This provides a standardized mechanism for cost recovery, billing, and performance benchmarking, reducing investment risk for developers and EPCs.
- Watch: Future project tenders that leverage these new supplementary fixed and energy charge structures for grid-scale storage deployment.
Background and Context
The Central Electricity Regulatory Commission (CERC) has taken a decisive step toward grid modernization by notifying the Terms and Conditions of Tariff (Second Amendment) Regulations, 2026. This regulatory move brings integrated energy storage systems—specifically those co-located with coal, lignite, or gas-based thermal generating stations and inter-state transmission systems (ISTS)—under a formal tariff framework. By establishing clear guidelines for approval, cost recovery, and operational billing, the CERC aims to incentivize the deployment of storage to enhance grid reliability and operational flexibility.
Key Details
The amendment introduces a comprehensive technical lexicon for storage, defining parameters such as declared capacity, C-rate, state of charge, and battery cycle. A critical component of this framework is the introduction of a supplementary tariff structure, comprising supplementary fixed storage charges and supplementary energy charges. The fixed charges are calculated based on annual fixed costs, including return on equity (set at 14% for additional capitalization), interest on loans, depreciation, and O&M expenses.
For energy accounting, the regulations mandate that auxiliary energy consumption be measured separately. Furthermore, the framework accounts for battery degradation, stipulating an annual adjustment factor of 2%. Performance benchmarks have been set at a normative availability factor of 90% for storage at generating stations, a round-trip efficiency of 85%, and auxiliary energy consumption of 5% of input energy. Lithium-ion systems are assigned a useful life of 15 years with a depreciation rate of 6.33%.
What This Means for EPCs and Developers
For EPC contractors and developers, this regulation removes the ambiguity surrounding the monetization of storage assets. The clear formula for supplementary energy charges—which links costs to the source of charging power—provides a predictable revenue model. Developers can now factor in specific depreciation schedules and performance norms when bidding for projects. The inclusion of storage as a legitimate cost-recoverable component in thermal and transmission projects opens a significant new market segment for integrated infrastructure, allowing EPCs to offer more comprehensive, grid-stabilizing solutions to utilities.
What Happens Next
The industry will now look toward the implementation of these regulations in upcoming ISTS-connected projects. The CERC has indicated that the 2% annual degradation factor will be subject to periodic review, suggesting that the regulator is prepared to adjust these norms as battery technology matures. Stakeholders should monitor subsequent orders regarding the specific determination of these charges for individual projects to understand the exact impact on project internal rates of return (IRR).
