New Delhi, November 4: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Viability Gap Funding (VGF) scheme of ₹14,500 crore to support 92 GWh of new grid-scale energy storage capacity over the period 2026-27 to 2030-31.
The capacity is split into 60 GWh of hydro pumped storage plants, 30 GWh of battery energy storage systems (BESS) and 2 GWh from alternative storage technologies. The total estimated investment is ₹97,600 crore.
Equal to 170% of current capacity
According to the government, the new capacity is equal to 170% of India’s present grid-scale energy storage capacity. It is meant to help the country reach the 411 GWh of grid-scale storage it needs by 2031-32.
The government said the scheme would help integrate more renewable energy into the grid, deal with the variable output of renewable generation and reduce reliance on conventional power plants for round-the-clock supply.
Capacity to be awarded through bidding
Storage capacity will be allocated through tariff-based competitive bidding. Public and private sector power distribution companies will be eligible for VGF support for BESS and pumped storage projects. Projects based on alternative storage technologies will be implemented by public and private sector entities.
The government said the VGF support is meant to improve the financial viability of these projects and speed up their deployment.
40% domestic content for battery projects
BESS projects under the scheme will have to meet a minimum domestic content requirement of 40%. The government said this would encourage battery manufacturing in India, create opportunities for Indian industry and cut dependence on imported components. It added that the requirement would work alongside existing supply-side incentives for battery manufacturing.
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