In a significant move towards enhancing energy storage capacity across India, the Ministry of Power (MoP) has launched a comprehensive ₹9,400 crore program aimed at fostering the development of 4,000 MWh of Battery Energy Storage Systems (BESS) by providing viability gap funding (VGF) of up to 40%. This initiative is set to span three fiscal years from 2023-24 to 2025-26, supported by a budgetary allocation of ₹3,760 crore.
The scheme mandates the completion of projects within two years from the signing date of agreements, with funding disbursed over five stages, tied to key milestones such as achieving financial closure and commencing commercial operations. The selection of project developers will be determined through a tariff-based competitive bidding process, encouraging private sector engagement while ensuring a cap on the maximum capacity any single developer can be awarded. Specifically, a developer may secure up to half the capacity in a given round but is limited to a cumulative maximum of 1,000 MWh across all rounds. Projects must have a minimum capacity of 100 MWh to be eligible.
Under the guidelines, the awarded contracts, spanning 10 to 12 years, will adopt a build-own-operate model. The National Load Dispatch Center (NLDC) will play a crucial role in identifying peak demand hours and managing grid stress, thereby optimizing the use and revenue generation from these storage systems.
Additionally, the policy outlines mechanisms for managing revenue surpluses and deficits, including penalties and bonuses linked to performance, and establishes a BESS Balancing Pool (BBP) for financial stability. The Central Transmission Utility of India (CTUIL) is tasked with overseeing the program’s implementation, announced in the 2024 interim budget.
