Minutes of the Meeting with BESS Industry representatives held under the Chairmanship of Additional Secretary (R&R) -reg – EQ
Summary:
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### 1. **Separate HSN Code for Grid-Scale Batteries**
| Issue | Current Situation | Business Impact | Action |
|——-|——————|—————-|——–|
| Lithium-ion cells, battery packs, and BESS containers share a single HSN code. | Port authorities sometimes classify BESS as “power banks,” attracting higher Basic Customs Duty (BCD). | Increased import cost, regulatory uncertainty for BESS developers. | MoP has written to Dept. of Revenue/CBIC. MNRE has requested a **sub-heading under battery HSN code for grid-scale batteries >1 MWh**. |
### 2. **Energy Storage Obligations (ESO) – State Non-Compliance**
| Issue | Business Impact | Action |
|——-|—————-|——–|
| Some states not implementing ESO in line with MoP order. | Disincentivizes storage investment; reduces demand for BESS from discoms. | MoP clarified that **Renewable Consumption Obligation (RCO)** notification already covers storage-sourced renewable energy. Further state-level clarification may be issued. |
### 3. **Quarterly Review Mechanism for BESS Project Progress**
| Request by IESA | Business Benefit | Action |
|—————-|—————–|——–|
| Establish a formal quarterly review mechanism to track BESS project deployment. | Provides predictability, allows early issue resolution, boosts investor confidence. | MoP assured **regular interactions** with BESS developers/manufacturers. |
### 4. **Approved List of Battery Manufacturers (ALBM) & Minimum Local Content (MLC)**
| Issue | Business Opportunity | Action |
|——-|———————|——–|
| No mandatory MLC for BESS projects; no ALBM framework. | Limits domestic manufacturing; heavy import dependence. | **IESA to provide**: (a) current level of domestic manufacturing of BESS components, (b) a **detailed note on MLC** to MoP. Potential for **phased, coordinated ALBM/MLC mandate**. |
### 5. **Charging Power Sources for Energy Storage Systems (ESS)**
| Current GNA Regulation | Industry Request | Action |
|————————|——————|——–|
| ESS can seek connectivity during non-solar hours but must install dedicated **Renewable Energy Generating Stations (REGS)** for charging. | Allow charging from **non-RE sources** and **RE sources not co-located** with ESS. | **BESS developers to submit a detailed note** to MoP on this issue. |
### 6. **MOOWR Regulations – BCD Deferment for BESS Projects**
| Issue | Business Impact | Action |
|——-|—————-|——–|
| Under Manufacture & Other Operations in Warehouse Regulations (MOOWR), BESS developers seek **BCD deferment for 12 years** (useful life of project). | Reduces upfront capital cost, improves project IRR. | MoP to take up with **CBIC/Dept. of Revenue** for clarification on applicability of MOOWR to BESS projects. |
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## **Strategic Business Implications**
1. **For BESS Manufacturers/Developers:**
– Expect **favorable duty treatment** once separate HSN code is notified.
– Prepare for **MLC mandates** – align domestic sourcing strategies.
– MOOWR-based BCD deferment could **significantly lower project costs** if clarified.
2. **For Discoms & State Agencies:**
– Must align ESO implementation with MoP orders – creates **assured demand** for storage.
– Quarterly reviews will increase **transparency on BESS deployment**.
3. **For Renewable Energy Generators:**
– Potential relaxation of charging source rules could allow **more flexible ESS operation** and revenue stacking.
4. **For Investors:**
– Reduced regulatory ambiguity (HSN, MLC, MOOWR) improves **risk-adjusted returns** for BESS projects.
– Regular MoP-industry engagement signals **policy stability**.
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