From Grid Guests to Storage Stakeholders: India’s 2025 Draft Rules and Electricity Consumers’ New Rights over Energy Storage Systems

India first granted formal legal status to Energy Storage Systems (ESS) through Rule 18 inserted by the Electricity (Amendment) Rules, 2022. The 2022 text recognised ESS as an integral “part of the power system” and allowed them to be developed, owned, leased or operated by generating companies, transmission or distribution licensees, system operators or independent storage providers; it also permitted owners to rent out storage capacity to utilities and load‑dispatch centres. While this was a milestone, consumers themselves could only access storage indirectly—either bundled with renewable supply or via services procured by their distribution company.

The Ministry of Power’s draft amendment issued on 11 June 2025 rewrites that limitation. It explicitly adds “consumers” to the list of persons who may develop, own, lease or operate an ESS, and allows any ESS developer to sell, lease or rent storage space directly to consumers. In effect, storage moves from being a utility‑centric network asset to a consumer‑empowering resource. The draft also confirms that an ESS inherits the legal status of its owner, ensuring regulatory clarity whether it is co‑located with generation or stands alone, yet it will still be treated as a separate element for scheduling and dispatch—a critical nuance for open‑access users and captive plants

Electricity Consumers’ Rights Under the 2025 Draft Amendments

The Draft Electricity (Amendment) Rules, 2025, signal a substantial shift in how energy storage is positioned within the Indian power ecosystem, particularly by conferring new rights and agency on electricity consumers. Here’s a detailed analysis of those rights and the corresponding regulatory implications:

1. Right to Develop, Own, Lease or Operate ESS

Under the proposed amendment, electricity consumers are explicitly permitted to develop, own, lease, or operate their own Energy Storage Systems (ESS). This is a transformational development, placing consumers—especially commercial and industrial (C&I) users—on equal footing with utilities and licensed entities in terms of energy infrastructure ownership.

Implications:

• Captive Storage Models: C&I consumers with variable load profiles or peak demand charges can install captive ESS to optimise energy procurement, reduce peak-time dependence, and improve cost-efficiency.
  
• Grid Resilience: Consumers with their own ESS can participate in demand-side management, frequency regulation, and load balancing, thereby enhancing grid stability.
  

2. Right to Purchase or Lease Storage Space

The Draft Amendment also enables the sale, lease, or rental of ESS capacity to consumers. This unlocks shared storage business models, much like warehousing or cloud computing.

Implications:

• Third-Party Storage-as-a-Service: Consumers can now subscribe to storage capacity without installing hardware. This is particularly useful for MSMEs and urban consumers lacking physical space.
  
• Retail Participation in Ancillary Markets: By using rented ESS capacity, consumers can participate in balancing markets or Time-of-Day tariff arbitrage schemes.
  

3. Expanded Consumer Choice in Energy Procurement

Previously, consumers could only receive electricity from distribution licensees or through open access with embedded generation. Now, with storage integrated into the value chain:

• Consumers can bundle renewable energy with ESS, ensuring a consistent power supply.
  
• ESS ownership allows shifting consumption from expensive peak periods to off-peak times, dramatically lowering electricity bills.
  
• Consumers can act as prosumers—storing solar energy during the day and feeding excess power back to the grid during peak hours.

4. Legal Clarity and Status

The Draft Amendment retains the principle that the legal status of the ESS aligns with its owner—be it a generator, licensee, or consumer. While this helps maintain regulatory consistency, it also raises a few key considerations:

• Licensing Exemption: As with the 2022 Rules, the activity remains delicensed, subject to registration with the Central Electricity Authority (CEA). This reduces barriers for consumer participation.
  
• Regulatory Oversight: Despite delicensing, consumers must still comply with technical standards, scheduling protocols, and interface regulations as framed by the CEA and relevant SERCs.
  

5. Absence of “Network Asset” Language

One notable omission from the Draft Amendment is the term “network asset”, previously used to characterise ESSs used by utilities. While this may simplify the legal positioning of consumer-owned storage, it also implies that:

• Consumers may not enjoy transmission-level priority for their ESS.
  
• Grid-interactive storage by consumers may need explicit nods under open access or wheeling frameworks.

Implementation Challenges and Regulatory Gaps

While the Draft Amendment significantly expands consumer rights, certain regulatory and practical challenges remain:

1. Interconnection Standards: Clear technical guidelines must be framed by the Central Electricity Authority (CEA) to govern how consumer-owned ESS interfaces with the grid—especially for injection, withdrawal, and reactive power management.
   
2. Tariff Clarity: Distribution licensees and State Electricity Regulatory Commissions (SERCs) need to define how time-of-day tariffs, fixed charges, and wheeling charges apply to consumers with storage.
   
3. Scheduling & Dispatch Mechanism: Since ESS is treated as a separate element for dispatch purposes, coordination with State Load Despatch Centres (SLDCs) will be critical. Protocols need to be developed for real-time scheduling by consumer-operated storage assets.
   
4. Consumer Protection Frameworks: As consumers become operators, leasing/renting ESS capacity must be governed by fair contract terms, interoperability standards, and data privacy protections.
   

Business Models Unlocked by the Draft Amendment

The inclusion of consumers as storage stakeholders opens the door for innovative business and financing models, including:

• Storage-as-a-Service (SaaS): Independent ESS developers can monetise idle capacity by renting it to C&I consumers under flexible terms. This resembles cloud storage models in the digital world.
  
• Behind-the-Meter Storage: High-consumption consumers (like data centres, malls, or hospitals) can deploy ESS to shave peak loads, ensure backup during outages, or participate in demand response markets.
  
• Energy Aggregators: Consumers may band together to pool ESS resources, creating Virtual Power Plants (VPPs) that can provide ancillary services or trade in power markets.
  
• Hybrid Supply Agreements: Distribution licensees may offer customised plans combining renewable generation and ESS access, creating stable and green alternatives to traditional power procurement.
  

Alignment with India’s Energy Transition Goals

The move to integrate consumers into the energy storage ecosystem is aligned with several national and international commitments:

• India’s Net Zero by 2070 Target: ESS allows for deeper integration of intermittent renewables, essential for achieving net-zero without compromising grid reliability.
  
• Green Open Access Rules, 2022: When combined with storage, open access can enable 24/7 green energy solutions, especially for large-scale consumers.
  
• PLI Schemes and BESS Tenders: The government’s Production Linked Incentive (PLI) scheme for battery manufacturing and recently announced bids for Battery Energy Storage Systems (BESS) underlines its commitment to localising supply chains and expanding storage adoption.
  

Conclusion

The Draft Electricity (Amendment) Rules, 2025, mark a pivotal moment in India’s electricity reform journey. By affirming the rights of consumers to not just use, but own, operate, and monetise energy storage, the Ministry of Power is democratizing access to a technology once limited to utilities and large-scale developers.

The implementation of these rules—supported by harmonised regulations, market incentives, and consumer education—can transform India’s electricity sector into a more decentralised, resilient, and decarbonised system. Consumers are no longer just passive recipients of energy; they are poised to become active architects of the grid of the future.