Govt approves Rs 3,760 cr viability gap funding for creating battery energy storage system
The Union Cabinet, chaired by the Prime Minister Narendra Modi, approved the Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS).
Addressing the media at a press conference, Union Minister Anurag Thakur informed that the scheme envisages development of 4,000 MWh of BESS projects by 2030-31, with a financial support of up to 40% of the capital cost as budgetary support in the form of VGF.
“The VGF for development of BESS Scheme, with an initial outlay of Rs.9,400 crore, including a budgetary support of Rs.3,760 crore, signifies the government’s commitment to sustainable energy solutions,” an official statement said.
By offering VGF support, the scheme targets achieving a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50-6.60 per kilowatt-hour (kWh), making stored renewable energy a viable option for managing peak power demand across the country. The VGF shall be disbursed in five tranches linked with the various stages of implementation of BESS projects, the statement adds.
It also said, “To ensure that the benefits of the scheme reach the consumers, a minimum of 85% of the BESS project capacity will be made available to Distribution Companies (Discoms). This will not only enhance the integration of renewable energy into the electricity grid but also minimize wastage while optimizing the utilization of transmission networks. Consequently, this will reduce the need for costly infrastructure upgrades.”
The selection of BESS developers for VGF grants will be carried out through a competitive bidding process.
