Battery Energy Storage Systems

September 8, 2023

The Union Cabinet has approved the Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS).
The approved 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 Viability Gap Funding (VGF).
The move is expected to bring down the cost of battery storage systems increasing their viability.
Designed to harness the potential of renewable energy sources such as solar and wind power, the scheme aims to provide clean, reliable, and affordable electricity to the citizens.
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.
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.
A minimum of 85% of the BESS project capacity will be made available to Distribution Companies (Discoms).
The selection of BESS developers for VGF grants will be carried out through a transparent competitive bidding process.