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					</table>The <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> has released a comprehensive framework to create an ecosystem for developing energy storage systems (ESS) to guarantee affordable, clean, stable, flexible, and secure power. The recommendations range from financial incentives to changes in bidding guidelines for storage projects. The Ministry has proposed policy and regulatory measures that are either under review or may be contemplated in the future.
Viability Gap Funding 
To enhance the cost-effectiveness of energy storage and make the battery energy storage system (BESS) a feasible choice, a recommendation has been made to extend the viability gap funding (VGF) support to the first few BESS projects. This VGF assistance could potentially cover up to 40% of the project&#8217;s capital expenses, subject to the condition that the projects are completed and commissioned within a timeframe of 18 to 24 months.
Through the suggested VGF, it becomes feasible to maintain the Levelized Cost of Storage (LCoS) at affordable levels. Considering the energy charging expenses for the BESS, the overall energy cost from BESS would be in line with market rates on power exchanges during peak demand periods. Consequently, with the proposed VGF, BESS becomes a practical choice for managing peak power needs.
Support for Pumped Storage Projects
Pumped Storage Projects are frequently initiated in remote regions that lack adequate infrastructure. The infrastructure created for these projects not only serves their immediate purpose but also facilitates the broader development of the area, offering opportunities for repurposing. This encompassing infrastructure scope may include the provision of transmission infrastructure extending up to the pooling point.
Green Finance
Government-concessional green financing can be harnessed to kickstart and expedite the development of the ESS industry. Sovereign Green Bonds, incorporated into the government&#8217;s broader financial initiatives, can serve as a source of funding for eco-friendly infrastructure and reducing carbon emissions in the economy. Additionally, financial institutions such as Power Finance Corporation, REC, and the Indian Renewable Energy Development Agency may offer extended, long-term loans to support ESS projects.
Resource Adequacy Plan
According to the Ministry, the guidelines for formulating a Resource Adequacy Plan can incorporate ESS within the planning framework.
The Central Electricity Authority (CEA) will issue a Long-term National Resource Adequacy Plan that estimates the national-level storage requirements for the upcoming decade. Furthermore, distribution companies (DISCOMs) must develop a Long-term Resource Adequacy Plan covering a ten-year horizon.
The Long-Term Resource Adequacy Plan will outline the projected need for ESS, spanning from the distribution level to the national level. This will enable developers, particularly pumped storage project developers, to plan and prepare for additional capacity well in advance.
The statutory obligation associated with the Resource Adequacy Plan will provide clarity regarding future ESS demand. Moreover, the statutory provision mandating 24/7 power supply will necessitate that DISCOMS integrate ESS as an essential component of their respective Resource Adequacy Plans.
Bidding Guidelines for ESS
The government may issue technology-agnostic bidding guidelines for long-term energy storage, short-term energy storage, and ancillary services. These guidelines aim to facilitate the rapid development of financially viable and ecologically sustainable ESS projects in the power sector, benefiting utilities, procurers, and developers.
The bidding process can be structured in two ways: either as a composite tariff, which includes the cost of input power if the developer arranges for the input power, or as a tariff per MWh for storage if the procurer of the storage capacity is responsible for arranging the input power.
Earlier this year, the Ministry of Power <a href="https://www.mercomindia.com/bidding-guidelines-renewable-projects-energy-storage" target="_blank" rel="noopener">issued</a> guidelines for the tariff-based competitive bidding process for procuring firm and dispatchable power from grid-connected renewable energy projects with ESS.
ESS with Renewable Generation
To guarantee a dependable power supply through sufficient storage capacity, new renewable energy ventures (excluding hydro projects) with an installed capacity exceeding 5 MW or as determined by the government may be required to incorporate Energy Storage Systems (ESS) with a minimum storage duration of 1 hour, representing at least 5% of the renewable energy project&#8217;s capacity.
The inclusion of such ESS capacity can be factored into the bidding process and may either be co-located with the renewable energy project or integrated with storage situated elsewhere.
Regulatory Measures
To achieve financial and commercial viability, ESS developers and intermediary agencies would be permitted to offer a range of market-based energy and power products. These products may include:
<ul>
<li>Spot energy market</li>
<li>Capacity market/Energy arbitrage (boosting capacity value by shifting off-peak generation to peak times)</li>
<li>Provision of ancillary services to the grid</li>
<li>Providing storage to other generating stations</li>
<li>Bundling to make renewable energy firm and dispatchable</li>
<li>Replacing diesel generators in various sites</li>
<li>Any other product that meets market demand or requirements</li>
</ul>
The appropriate commission may consider ESS an alternative when approving the Capital Expenditure (CAPEX) requirements for any new transmission or distribution system.
The Ministry has emphasized the need for the relevant commission to define Time of Day (ToD) tariffs applicable to commercial and industrial (C&amp;I) and other consumer categories per the established regulations. This initiative aims to incentivize consumers and utilities to leverage ESS to optimize their power costs.
Additionally, ESS systems utilizing renewable energy sources for charging may be eligible for carbon credits, with the specific accounting methodology to be provided separately.
Also, ESS integrated into rooftop solar projects or deployed in a distributed manner can be aggregated on a grid-scale level, benefiting both DISCOMs and system owners. To facilitate this, the relevant commission may establish a supportive framework for peer-to-peer energy trading.
The relevant commission may introduce distinct tariff regulations for pumped storage projects to ensure tariff viability. This may encompass rationalizing factors like the return on equity, debt-to-equity ratio, and similar considerations.
Tax and Duty waivers
In accordance with the principles of double taxation avoidance, the framework recommends that the electricity duty and cross-subsidy surcharge should not be imposed on the input power utilized for charging ESS. ESS primarily serves to efficiently store energy during off-peak periods and release it during peak demand periods. Therefore, the electricity duty and the cross-subsidy surcharge should apply solely to the ultimate electricity consumption.
Also, states can waive the payment of stamp duty and registration fees for the acquisition of land designated for the installation of ESS.
Manufacturing of BESS
To promote indigenous manufacturing, the government may formulate a production-linked incentive (PLI) program specific to BESS to be used in the power sector.
In June this year, Union Power Minister R.K. Singh <a href="https://www.mercomindia.com/new-pli-program-energy-storage" target="_blank" rel="noopener">proposed</a> implementing a PLI initiative for grid-scale storage to bolster capacity and encourage ongoing investments.
Quality and Standards
To uphold quality and standards for BESS in power sector applications, the government may contemplate the creation of an Approved List of Models and Manufacturers (ALMM) for BESS, akin to the ALMM list for solar modules issued by the Ministry of New and Renewable Energy (MNRE).
Research and Development
The government may set up a nodal agency to oversee the sector&#8217;s research and development endeavors, with funding channeled through this entity. Furthermore, the nodal agency may establish and maintain a nationwide online platform to streamline knowledge exchange and prevent redundant R&amp;D initiatives.
Recycling and Sustainability
Specialized waste management facilities could be established to streamline electronic waste collection in adherence to government regulations. A structured mechanism, complete with predefined criteria and essential standards, will be instituted to enable the repurposing of ESS components from one application for reuse in another. Formulating a standardized operating procedure can promote recycling endeavors and the recovery of materials from end-of-life batteries.
Moreover, discarded mines, including those previously exploited and excluding coal mines designated for ash back-filling, can be repurposed as hydro storage facilities, naturally facilitating the establishment of pumped storage projects.
New mines earmarked for mining operations should include an approved mine closure plan encompassing pumped storage projects&#8217; development. Collaboration between the central public sector undertakings (CPSUs) and coal sector CPSUs can aid in identifying potential and feasible sites and expedite the deployment of pumped storage projects in such coal mines across the country.
In June this year, the government <a href="https://www.mercomindia.com/fast-track-commissioning-pumped-storage-projects" target="_blank" rel="noopener">introduced</a> several initiatives to expedite pumped storage project commissioning.
Last year, the Ministry of Power had <a href="https://www.mercomindia.com/power-ministry-notifies-wind-hydro-and-energy-storage-purchase-obligation" target="_blank" rel="noopener">issued</a> the Renewable Purchase Obligation (RPO) and Energy Storage Obligation (ESO) until the financial year 2029-2030. The ESO will be calculated in energy terms as a percentage of the total electricity consumption and treated as fulfilled only when at least 85% of the total energy stored in the ESS is procured from renewable energy sources annually.
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Ministry Proposes Viability Gap Funding for Energy Storage Projects

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					</table>The Rajasthan Electricity Regulatory Commission (<a href="https://rerc.rajasthan.gov.in/" target="_blank" rel="noopener">RERC</a>) has notified the new renewable purchase obligation (RPO) for the state to include energy storage and move solar along with biomass into the other RPO category.
The new policy provides an RPO trajectory until the financial year (FY) 2029-2030.
The changes align with the regulation <a href="https://mercomindia.com/power-ministry-notifies-wind-hydro-and-energy-storage-purchase-obligation/" target="_blank" rel="noopener">issued</a> by the Ministry of Power (MoP) and will be effective from April 1, 2024.
The previously <a href="https://www.mercomindia.com/rajasthan-adds-hydropower-renewable-targets" target="_blank" rel="noopener">specified</a> RERC 2007 regulations have notified the RPO targets until the end of the financial year 2023-2024.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO.png"><img decoding="async" class="aligncenter wp-image-55342 " src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO.png" alt="Rajasthan RPO" width="100%" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO.png 1196w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO-300x125.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO-768x320.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO-650x271.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO-624x260.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/Rajasthan-RPO-600x250.png 600w" sizes="(max-width: 1196px) 100vw, 1196px" /></a>
According to the regulator, the RPO for wind energy will be fulfilled by energy produced from projects commissioned after March 31, 2022. The RPO may also be met by the excess wind energy consumed beyond 7% of total energy consumption from projects commissioned before March 31, 2022.
Any shortfall in achieving wind RPO in a year can be met with excess energy consumed from hydropower plants, which is more than the HPO for that year and vice versa.
Further, any shortfall in achieving &#8216;Other RPO’ in a year can be met with the excess energy consumed from wind power projects commissioned after March 31, 2022. This wind power must be beyond the wind RPO for that year.
The regulator said the hydropower purchase obligation (HPO) could only be fulfilled by energy produced from large hydropower projects, including pumped hydro projects, commissioned after March 8, 2019.
Furthermore, starting from FY 2024-25, all energy generated from hydropower projects will be considered as part of the RPO. However, the HPO trajectory outlined in the above table will continue to apply to large hydropower projects commissioned after March 8, 2019.
The energy produced by all other hydropower projects, including free power from hydropower projects commissioned before March 8, 2019, will be accounted for under the &#8216;Other RPO&#8217; category within the new framework.
Additionally, the RPO will be calculated as a percentage of the total electricity consumption. The HPO obligation of the state can be fulfilled using the free power supplied by hydropower projects commissioned after March 8, 2019, as per the agreement in place at that time. This excludes the Local Area Development Fund contribution as long as the power is consumed within the state. Only the free power (not that contributed toward Local Area Development) will be eligible for the HPO benefit.
If the mentioned free power does not meet the HPO obligations, the obligated entity must purchase additional hydropower or acquire renewable energy certificates corresponding to hydropower shortage to fulfill its obligation.
The mechanism for renewable energy certificates for hydropower and other renewable power, facilitating compliance with HPO and Other RPO, will be defined as per the guidelines specified by the Central Electricity Regulatory Commission.
The HPO trajectory will be adjusted annually, considering any revisions to the commissioning schedule of hydropower projects.
Hydropower imported from outside India will not be considered for meeting HPO.
Energy Storage Obligation
The Commission has also notified the Energy Storage Obligation (ESO) trajectory until FY30. The ESO will be calculated as the percentage of total energy consumed from solar and wind projects with storage.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/ESO.png"><img decoding="async" class="aligncenter wp-image-55343 " src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/ESO.png" alt="ESO" width="100%" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/ESO.png 593w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/06/ESO-300x250.png 300w" sizes="(max-width: 593px) 100vw, 593px" /></a>
The ESO will be calculated in energy terms as a percentage of the total electricity consumption and treated as fulfilled only when at least 85% of the total energy stored in the energy storage system (ESS) is procured from renewable energy sources annually.
The ESO will be reviewed periodically, considering the commissioning of pumped hydro projects. ESO has been added to accommodate commercially viable energy storage technologies and reduce the cost of battery energy storage systems.
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Rajasthan Notifies Wind, Hydro & Energy Storage Purchase Obligation Until FY30

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					</table>The Bihar Electricity Regulatory Commission (<a href="https://berc.co.in/" target="_blank" rel="noopener">BERC</a>) has issued the draft &#8216;RPO, its compliance and REC Framework Implementation) (4th Amendment) Regulation 2022.&#8217;
In line with the directions of the Ministry of Power, the Commission has proposed to specify separate wind renewable purchase obligation (RPO), hydropower purchase obligation (HPO), and other RPO within the overall RPO target.
Also, the appropriate provisions related to RPO, as specified in the &#8216;Green Energy Open Access Rules 2022,&#8217; have been proposed to be incorporated in the 4th amendment to the RPO Regulations.
The stakeholders have time until September 12 to submit their objections and suggestions.
The Commission has proposed the RPO targets until FY 2030, consisting of wind RPO, HPO, and other RPO. The minimum quantity of electricity to be procured from renewable sources by obligated entities as a percentage of total consumption is given below:
<img loading="lazy" decoding="async" class="aligncenter size-full wp-image-40601" src="https://mercomindia.com/wp-content/uploads/2022/08/Bihar-RPO-2030.png" alt="Bihar RPO 2030" width="467" height="342" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/08/Bihar-RPO-2030.png 467w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/08/Bihar-RPO-2030-300x220.png 300w" sizes="(max-width: 467px) 100vw, 467px" />
As per the new clause, HPO should be met only by energy produced from large hydro projects (LHPs) commissioned after March 8, 2019. Wind RPO should be met only by energy produced from wind power projects commissioned after March 31, 2022. Similarly, other RPO may be met by energy produced from any green energy-based power project (excluding wind and hydro).
If the free power provided by the state is insufficient to meet the HPO targets, then the obligated entity would have to buy the additional hydropower or may have to buy the corresponding amount of renewable energy certificates (RECs) corresponding to hydropower.
Further, any shortfall in the achievement of the &#8216;other RPO&#8217; category can be met with either excess energy consumed from wind power projects commissioned after March 31, 2022, beyond wind RPO for that year. The shortfall can also be met with excess energy consumed from eligible large hydro projects commissioned after March 8, 2019, beyond HPO for that year. Further, any shortfall in achieving wind RPO in a particular year can be met with excess energy consumed from hydropower projects, which exceeds HPO for that year and vice versa. The renewable energy purchased through bundled power will qualify for RPO compliance to the extent of the renewable energy content in the bundled power.
Also, the Commission has added the energy storage obligation targets until 2029-30 under a new clause.
The following percentage of total energy consumed should be solar or wind energy along with storage:
<img loading="lazy" decoding="async" class="aligncenter size-full wp-image-40602" src="https://mercomindia.com/wp-content/uploads/2022/08/Bihar-ESO-2030.png" alt="Bihar ESO 2030" width="350" height="297" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/08/Bihar-ESO-2030.png 350w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/08/Bihar-ESO-2030-300x255.png 300w" sizes="(max-width: 350px) 100vw, 350px" />
The energy storage obligation (ESO) should be calculated in energy terms as a percentage of the total consumption of electricity and should be treated as fulfilled only when at least 85% of the total energy stored in the energy storage system, on an annual basis, is procured from renewable energy sources.
As per another new clause, any obligated entity may elect to generate, purchase and consume renewable energy to meet their obligation by one or more of the following methods:
<ul>
<li>There should not be any capacity limit for the installation of power projects from renewable energy sources by obligated entities for their consumption. Such plants may be set up at any location in India, and power shall be transmitted through open access.</li>
<li>By procuring renewable energy through open access from any developer either directly or through a trading licensee or power markets.</li>
<li>By purchasing RECs per the applicable regulations.</li>
<li>The obligated entity can also meet its RPO targets by purchasing green hydrogen or green ammonia. The quantity of such green hydrogen or green ammonia would be computed by considering the equivalence to the green hydrogen or green ammonia produced from one MWh of electricity from renewable sources or its multiples.</li>
</ul>
Last month, the Ministry of Power (MoP) <a href="https://mercomindia.com/power-ministry-notifies-wind-hydro-and-energy-storage-purchase-obligation/" target="_blank" rel="noopener">issued</a> the RPO and ESO until the financial year 2029-2030. A committee under the co-chairmanship of secretaries of MoP and Ministry of New and Renewable Energy was constituted on December 17, 2020, to recommend RPO trajectory beyond 2021-22. Based on the recommendations of the joint committee and discussions with MNRE, MoP specified the RPO trajectory beyond 2021 -22.
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Bihar Proposes Renewable Power Purchase Obligation Trajectory Until 2030

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