The Kerala State Electricity Regulatory Commission (KSERC) has proposed a new tariff framework for energy storage systems under its Draft Kerala State Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2026, covering the five-year control period from 1 April 2027 to 31 March 2032.
The draft introduces specific provisions for Battery Energy Storage Systems (BESS), pumped storage projects and other energy storage technologies, while recognising Energy Storage System Developers as regulated entities. Among the proposed measures is an 85% normative cycle-efficiency benchmark for BESS, along with a 20 paise per kWh incentive for energy supplied above the normative efficiency level.
85% Normative Efficiency for BESS
Under the proposed framework, BESS projects would be subject to a normative cycle-efficiency requirement of 85%. The draft also provides a performance-linked incentive for storage projects that achieve cycle efficiency above the prescribed normative level.
The proposed incentive is 20 paise per kWh, calculated for energy supplied above the normative threshold in accordance with the conditions specified in the regulations. The mechanism is intended to link the financial treatment of storage assets with their actual operating performance rather than relying only on installed MW and MWh capacity.
The draft also establishes provisions for capacity charges for BESS, with the capacity-charge mechanism linked to the availability of the storage system. This creates a framework in which both availability and energy-performance parameters can influence the treatment of storage assets.
Beneficiary to Arrange Charging Electricity
The proposed regulations specify that the beneficiary or beneficiaries would arrange the electricity required for charging the BESS, taking into account transmission and distribution losses up to the BESS busbar.
In return, beneficiaries would be entitled to energy during peak hours based on the applicable storage-performance provisions. The BESS would be required to supply the specified quantity during the relevant peak period.
This arrangement establishes a clear separation between the electricity used to charge the battery and the storage service provided by the BESS. The detailed scheduling, metering and settlement provisions will determine how the arrangement is implemented in practice.
Grid-Forming Inverters Proposed for Upcoming BESS
The draft also proposes a technical requirement for grid-forming inverters for upcoming BESS projects.
Grid-forming capability allows inverter-based resources to contribute to voltage and frequency support by establishing or supporting electrical references rather than operating solely by following an existing grid waveform. The inclusion of this requirement would make inverter capability an explicit consideration in future BESS procurement and project design in Kerala.
The requirement also places greater importance on appropriate inverter controls, system studies and commissioning procedures. Project developers would need to ensure that the selected equipment complies with the technical requirements applicable to the project and the wider electricity network.
Energy Storage Developers Included in MYT Framework
The draft regulations bring Energy Storage System Developers (ESSD) within the proposed regulated framework. The provisions cover BESS, pumped storage projects and other energy-storage technologies.
For BESS, the draft proposes an 85% normative round-trip efficiency, while the corresponding normative efficiency proposed for pumped storage projects is 75%. The framework also proposes useful-life parameters for storage assets and provides for capacity charges linked to availability.
The inclusion of storage developers within the MYT framework represents a move toward establishing specific regulatory treatment for storage assets as their role in electricity supply and system operations expands.
Five-Year Control Period
The proposed MYT framework would apply from FY 2027-28 through FY 2031-32, with the control period beginning on 1 April 2027 and ending on 31 March 2032. The regulations are intended to replace the existing KSERC tariff regulations applicable to the current control period.
The draft covers several electricity-sector entities and activities, including generation, transmission, distribution, energy storage systems and the State Load Despatch Centre.
Regulated entities would be required to submit petitions for approval of their Aggregate Revenue Requirement and determination of tariff within the framework and timelines prescribed by the proposed regulations.
Stakeholder Consultation Underway
The proposed regulations remain at the draft stage and are therefore subject to stakeholder consultation and possible changes before finalisation.
KSERC has invited objections and suggestions on the draft. Stakeholders intending to participate in the consultation process are required to register by 18 September 2026, while written objections and suggestions are to be submitted by 25 September 2026.
The final provisions could therefore differ from the current draft, including the proposed technical and financial treatment of energy storage systems.
Conclusion
KSERC’s Draft Multi Year Tariff Regulations, 2026 propose a dedicated regulatory framework for energy storage during the 2027-28 to 2031-32 control period.
For BESS, the draft proposes an 85% normative cycle efficiency, a 20 paise/kWh incentive for performance above the normative level, beneficiary-arranged charging electricity and grid-forming inverter capability for upcoming projects. It also brings Energy Storage System Developers within the proposed regulated framework.
The proposals remain subject to stakeholder consultation, with comments due by 25 September 2026. The final regulations will determine how these provisions are ultimately applied to storage projects operating within Kerala’s electricity sector.
Official Source
Kerala State Electricity Regulatory Commission — Draft Regulations
KSERC’s regulations section lists the Draft Kerala State Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2026, which contains the proposed provisions covering energy storage systems and the 2027-28 to 2031-32 control period. The Commission’s website is currently presented through a JavaScript-based portal.
KSERC — Regulations
Supporting References
Power Peak Digest — Kerala MYT framework
Provides detailed coverage of the proposed BESS efficiency benchmark, grid-forming requirement, 20 paise/kWh incentive, capacity-charge mechanism and control period.
Power Peak Digest — KSERC Multi Year Tariff Regulations 2026
Legality Simplified — KSERC MYT Regulations 2026
Reports the draft’s five-year control period, energy-storage provisions and stakeholder-consultation deadlines.
Legality Simplified — KSERC Proposes Multi-Year Tariff Regulations 2026
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