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CERC Proposes 14 % Return on Equity for Energy Storage Added to Thermal Power Plants

The Central Electricity Regulatory Commission (CERC) has issued draft amendments outlining guidelines for situations where existing coal- and lignite-based power plants, as well as transmission licensees, choose to install integrated energy storage systems (IESS). A key highlight of the proposal is a 14% return on equity (RoE) for the additional capital investment required for such storage installations.

Under the draft rules, any generating company or transmission licensee planning to add battery storage must notify all beneficiaries and submit a petition to CERC for approval before undertaking expenditure. Once approved, they would be allowed to recover a higher tariff to account for the extra investment.

The draft also states that the fixed storage charges for an IESS will be apportioned among beneficiaries based on their share or allocation in the generating station’s capacity. Additional guidelines cover the treatment of expenses related to depreciation, maintenance spares, and O&M costs, ensuring clarity on how these financial components should be calculated.