Hybridizing the Grid: CERC’s 2025 Tariff Amendment for Storage-Linked ISTS

The Central Electricity Regulatory Commission (CERC) has released the Draft Terms and Conditions of Tariff (Second Amendment), 2025, marking a significant evolution in India’s transmission tariff framework. Building on the 2019 regulations and the 2023 first amendment, the new draft introduces provisions that mainstream energy storage systems (ESS) into tariff determination, particularly when linked to thermal Inter-State Transmission Systems (ISTS).

Earlier regulations had focused on cost-plus methodology, return on equity, and availability-based incentives, while the 2023 update expanded scope to renewable evacuation and battery energy storage. The 2025 draft goes further by recognizing the capital and operational costs of ESS co-located with thermal transmission assets, ensuring their recovery through tariffs. This move is expected to incentivize hybrid thermal-storage projects, improve grid reliability, and reduce peak demand stress.

The draft emphasizes stricter prudence checks on capital expenditure, revised benchmarks for operation and maintenance costs, and enhanced performance incentives tied to transmission availability. By embedding ESS into the tariff framework, CERC aims to reduce variability in power flows, strengthen peak load management, and enhance the efficiency of transmission corridors. For transmission licensees, the amendment introduces greater accountability in cost approvals but also opens new revenue streams through storage-linked assets. Thermal generators gain flexibility and improved bankability by hybridizing with ESS, while renewable developers and hydrogen clusters benefit from reduced curtailment and more reliable evacuation. Consumers stand to gain from moderated tariffs and improved grid stability, while policymakers see this as a step toward mainstreaming storage in India’s energy transition.

Anchored in the Electricity Act, 2003, and aligned with the National Electricity Policy and Tariff Policy, the draft amendment provides a transparent and future-ready framework for integrating new technologies into India’s transmission system.

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