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In a pivotal move towards sustainable energy solutions, the Union Cabinet, led by the Hon’ble Prime Minister of India, has given the green light to the Scheme for Viability Gap Funding (VGF) for the development of Battery Energy Storage Systems (BESS). This ambitious scheme has set its sights on nurturing 4,000 MWh of BESS projects by the year 2030-31, with substantial financial support of up to 40% of the capital cost in the form of Viability Gap Funding (VGF).
At the core of this initiative lies the aim to harness the potential of renewable energy sources, such as solar and wind power, to provide clean, dependable, and cost-effective electricity to the nation’s citizens. The scheme, backed by an initial outlay of Rs. 9,400 crore, including a budgetary support of Rs. 3,760 crore, underscores the government’s resolute commitment to sustainable energy solutions. By offering VGF support, the scheme aspires to achieve a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50 to Rs. 6.60 per kilowatt-hour (kWh), rendering stored renewable energy a practical choice for addressing peak power demand nationwide. The disbursement of VGF will occur in five stages, closely aligned with the various phases of BESS project implementation.
With the objective of ensuring that consumers directly benefit from this scheme, a minimum of 85% of the BESS project capacity will be reserved for Distribution Companies (Discoms). This strategic move not only promotes the seamless integration of renewable energy into the national electricity grid but also minimizes energy wastage while optimizing the usage of transmission networks. Consequently, this approach reduces the necessity for costly infrastructure upgrades.
The selection of BESS developers eligible for VGF grants will be conducted through a transparent competitive bidding process, fostering fair competition between both public and private sector entities. This approach is poised to cultivate a thriving ecosystem for BESS, attracting substantial investments and generating opportunities for associated industries.
The Government of India remains steadfast in its commitment to advancing clean and green energy solutions. The BESS Scheme is a significant stride toward realizing this vision. By harnessing the potential of renewable energy and promoting the adoption of battery storage, the government aspires to pave the way for a more sustainable and eco-friendly future for all citizens.
