Government Notifies Rules to Broaden Energy Storage Ownership and Usage
The new rules clarify the legal status of co-located energy storage systems
September 22, 2025
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The Ministry of Power has notified the Electricity (Amendment) Rules, 2025, introducing changes in the regulatory framework governing the energy storage systems (ESS) usage.
In June this year, the Ministry proposed the amendment to permit the sale, lease, and renting of ESS.
The rules amend provisions of Rule 18 of the Electricity Rules, 2005, with a focus on broadening the scope of energy storage utilization and ownership.
The revised sub-rule (2) states that an ESS can be used either as an independent storage facility or as part of generation, transmission, or distribution. This provision establishes a legal basis for storage assets to function across the electricity value chain instead of being confined to a single segment.
The substituted sub-rule (4) expanded the ESS ownership and operational flexibility. The rules now allow ESS to be developed, owned, leased, or operated by a generating company, transmission licensee, distribution licensee, consumer, system operator, or an independent energy storage service provider.
The amendments also clarify the legal status of storage systems that are co-located with generating stations, transmission licensees, distribution licensees, or consumers, granting the system the same legal status as its owner.
If such storage is not co-located but still owned and operated by these entities, the storage system will retain the legal status of the owner while being treated as a separate storage element for scheduling, dispatch, and related regulatory matters.
The substituted sub-rule (5) gives ESS developers and owners the option to sell, lease, or rent out storage capacity in full or in part. Such capacity may be provided to consumers, utilities engaged in generation, transmission, or distribution, as well as to load despatch centres or any other entity.
In February this year, the Ministry of Power mandated that all renewable energy implementing agencies and state utilities incorporate a minimum two-hour co-located ESS equivalent to 10% of the installed solar capacity in all solar tenders.
