The Union Cabinet approved a ₹3,760 crore viability gap fund (VGF)—grants aimed at enhancing the viability of infrastructure projects—for battery energy storage systems (BESS), in a boost for the renewable energy sector that banks on storage when green power generation is low or down.
Under the scheme, the government will provide financial support of up to 40% of the capital cost of BESS projects totalling 4,000 megawatt-hours (MWh) till FY31. An official statement on Wednesday said the scheme aims to reduce the levelized cost of storage (LCoS) to ₹5.50-6.60 per kilowatt-hour (kWh), making storage a viable option to manage peak power demand. According to industry estimates, the LCoS currently stands at around ₹10-11 per kWh.
Union minister for information and broadcasting Anurag Thakur told reporters that the VGF would be disbursed in five tranches linked with various stages of implementation of BESS projects. “We have set the goal of meeting 50% of our energy requirement from renewable or non-fossil energy sources by 2030. We are committed to this. We have also met other targets before time. Today, a big decision has been taken in that direction to facilitate VGF for setting up BESS. For this, ₹3,760 crore will be spent. This a 100% central grant," the minister said, adding the move may attract investments of about ₹9,500 crore.
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