September 14, 2023: India is launching a program to help fund a total of 4,000MWh of new BESS projects by 2030-31.
The government said on September 6 the cabinet had approved the “watershed” Viability Gap Funding (VGF) scheme, under which the state will cover up to 40% of the capital cost of projects selected under a competitive bidding process.
The move aims to increase the viability of energy storage systems as India looks to expand its use of renewables such as solar and wind.
VGF is targeting a levelized cost of storage ranging from Rs5.50 crore ($0.066) to Rs6.60 crore per kilowatt hour.
Ministers have earmarked VGF grants worth a total of Rs3,760 crore to fund the scheme.
Grants will be disbursed in five tranches linked with the various stages of implementing BESS projects.
A minimum of 85% of awarded BESS capacity will be made available to power distribution companies to ensure consumers see real benefit from the scheme, the government said.
“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.”
According to the government, this in turn will reduce the need for costly infrastructure upgrades.