The Kerala State Electricity Regulatory Commission (KSERC) has notified its Multi-Year Tariff Regulations, 2026, introducing a dedicated framework for battery energy storage systems (BESS), pumped storage projects (PSPs) and other storage technologies. The regulations cover the five-year control period from financial year 2027-28 to 2031-32 and provide tariff-related rules for storage projects operating within the state’s electricity system.
A key feature is the use of normative performance benchmarks for storage technologies. The regulatory framework sets a cycle-efficiency benchmark of 85% for BESS and 75% for pumped storage. The draft framework also proposed a performance incentive of ₹0.20 per kWh for energy supplied above the applicable efficiency benchmark, subject to monthly performance conditions. These benchmarks are intended to link tariff treatment with the performance of storage assets rather than treating all installed capacity as equivalent.
The draft also specified availability requirements of 95% for BESS and 90% for pumped storage. For battery systems, it proposed a normative depth of discharge of 90%, with annual battery degradation assumed at 1% of installed capacity. Availability would be assessed in 15-minute time blocks against scheduled charging and discharging for batteries, and pumping and generation for pumped storage. These provisions establish measurable operating parameters for storage projects, although the final notified text should be consulted before attributing every draft provision to the binding regulations.
The proposed framework also addresses how storage assets may be developed and used. It covers projects developed by distribution licensees, independent storage developers and generation or transmission businesses installing storage to improve grid reliability, provide flexibility or defer network investment. It also proposes arrangements for community or collective storage, allowing consumers, prosumers and developers to agree on storage capacity, charging and discharging arrangements, and the allocation of associated costs and benefits.
Early commissioning is another distinctive feature of the draft. For storage projects operating under an approved Battery Energy Storage Purchase Agreement, the proposed incentive structure links payments to how far ahead of schedule a project reaches commercial operation and to its availability. The draft outlined incentives of 5% for commissioning up to one month early, 10% for more than one month and up to two months early, and 15% for commissioning more than two months early. These were draft provisions; their final applicability depends on the notified regulatory text and the relevant project arrangements.
The regulations also sit within a broader effort to improve utility cost control. KSERC’s proposed multi-year framework replaces a flat escalation approach to operation and maintenance costs in transmission and distribution with normative benchmarks linked to business growth and actual consumer and wholesale price indices. The framework is intended to improve cost scrutiny and help pass efficiency gains to consumers.
The practical significance for storage developers will depend on how the notified rules are applied in tariff petitions, procurement agreements and project approvals. Efficiency benchmarks, availability obligations, charging arrangements and commissioning incentives can influence project design and revenue calculations. For Kerala’s power sector, the framework provides a more specific regulatory basis for evaluating storage as an asset that can support peak demand, renewable integration and electricity-system flexibility.