The Ministry of Power has proposed extending payment security provisions under the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, to independent Energy Storage System (ESS) developers.
The proposed amendment is intended to strengthen payment discipline in the electricity sector and provide greater financial certainty to companies investing in battery energy storage systems and other grid-scale storage technologies.
Under the existing framework, payment security provisions cover power generators, transmission licensees and electricity traders.
The ministry’s proposal seeks to bring independent energy storage service providers within this framework, recognising their growing role in maintaining grid stability and supporting the integration of renewable energy into the electricity network.
If implemented, the proposed provisions would offer ESS developers protection against delayed payments by distribution companies (DISCOMs).
These could include the application of late payment surcharge mechanisms and restrictions on continued power procurement in cases involving prolonged payment defaults.
Such provisions are expected to reduce payment-related risks for storage developers and improve confidence among companies considering investments in the segment.
The ministry has invited comments and suggestions from stakeholders within 30 days before taking a final decision on the proposed amendment.
The consultation process is expected to provide an opportunity for energy storage developers, power distribution companies and other industry participants to present their views on the proposed payment security mechanism.
The proposal comes at a time when energy storage is becoming increasingly important for India’s electricity system.
With the growing deployment of solar and wind power, the grid requires flexible resources that can store surplus electricity during periods of high generation and release it when demand rises or renewable output declines.
Battery energy storage systems can help manage peak demand, provide balancing services and improve the reliability of electricity supply.
However, the financial viability of independent storage projects depends significantly on predictable revenue streams and timely payments from procuring entities.
