The Punjab State Electricity Regulatory Commission (PSERC) has proposed amendments to the Punjab State Electricity Regulatory Commission (Harnessing of Captive Power Generation) Regulations, 2022, with a specific focus on the banking of energy by renewable energy–based captive generating projects (CGPs).

Under the “Punjab State Electricity Regulatory Commission (Harnessing of Captive Power Generation) (First Amendment) Regulations, 2026,” the banking facility will remain available only to captive users drawing power from renewable energy-based CGPs connected to the intrastate transmission or distribution system.

Banking will be governed by the PSERC (Terms and Conditions for Intra-State Open Access) Regulations, 2011, as amended from time to time, and will be permitted only after execution of a banking agreement with the distribution licensees.

The draft explicitly states that banked energy cannot be sold to third parties. Captive generating stations and captive users will be required to fulfil the captive status conditions under Rule 3 of the Electricity Rules, 2005, at the end of every financial year to continue availing the benefits of captive generation and banking

Background

PSERC introduced the Harnessing of Captive Power Generation Regulations in October 2022, with the objective of promoting captive generation in Punjab, particularly renewable energy–based CGPs, to ensure reliable and cost-effective power supply for industries while supporting renewable energy development.

Banking of energy was provided as a key facilitative measure to enable captive users to balance variability in renewable generation and consumption. However, during implementation, the Commission observed operational and settlement-related bottlenecks in the utilization of banked energy within a financial year.

The Commission noted that similar provisions regarding banking were being proposed under the Intra-State Open Access Regulations, 2011, raising concerns about regulatory duplication and inconsistent treatment of banked energy.

In its explanatory memorandum, PSERC has linked the amendment to its statutory mandate under Sections 86(1)(b) and 86(1)(e) of the Electricity Act, 2003, which require state commissions to regulate power procurement by distribution licensees and promote cogeneration and renewable energy.

Commission’s Analysis

In its analysis, PSERC has proposed that compliance with the captive status conditions will be the determining factor in retaining banking benefits.

If a captive generating station or captive user fails to meet the conditions specified under Rule 3 of the Electricity Rules, 2005, the entire banked energy, as well as energy already utilized under banking, will be treated as firm power injected into the grid. Further, any energy drawn from the grid by such users will be billed at the applicable retail tariff rates approved by the Commission, rather than captive or open access–linked charges.

According to PSERC, treating non-compliant captive energy as infirm power will help maintain grid discipline, protect distribution licensee revenues, and minimize cross-subsidy distortions.

By aligning the banking provisions of the captive generation regulations with the open access framework, the Commission stated that the amendments are intended to remove ambiguities, ensure uniform regulatory treatment, and promote renewable captive generation while enforcing strict compliance with statutory captive conditions.

In October 2025, PSERC approved the continuation of power procurement by Punjab State Power Corporation from NHPC’s 300 MW solar project at Bikaner in Rajasthan and 100 MW solar project at Khavda in Gujarat, even for capacity commissioned after June 30, 2025.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.