The Government of India has rolled out a comprehensive set of policy, regulatory, and financial initiatives to rapidly scale up the country’s energy storage capacity, in line with its renewable energy expansion and grid stability objectives.
According to the Central Electricity Authority’s (CEA) report Optimal Generation Mix 2030, India will require 60.63 GW of energy storage capacity by 2029–30, including 18.98 GW from Pumped Storage Projects (PSP) and 41.65 GW from Battery Energy Storage Systems (BESS).
To achieve this target, the government has introduced multiple measures covering policy frameworks, financial incentives, and research and development support.
Policy and Regulatory Measures
The Ministry of New and Renewable Energy (MNRE) has issued guidelines for the procurement and utilisation of BESS across generation, transmission, and distribution assets, including ancillary services. A National Framework for Energy Storage Systems (ESS) and separate guidelines for promoting PSP development have also been notified.
To expedite project implementation, the government has announced a 100% waiver of Inter-State Transmission System (ISTS) charges for PSP projects awarded on or before June 30, 2028. A similar ISTS waiver has been extended to co-located BESS projects commissioned within the same timeline, subject to prescribed conditions.
Financial Support Through VGF Schemes
In March 2024, the government approved a ₹3,760 crore Viability Gap Funding (VGF) scheme for the development of 13,220 MWh of large-scale BESS, providing financial assistance of ₹27 lakh per MWh.
Subsequently, in June 2025, another VGF scheme was introduced for 30 GWh of BESS capacity, supported by ₹5,400 crore from the Power System Development Fund (PSDF), offering funding support of ₹18 lakh per MWh.
In addition, 10 GWh of grid-scale stationary storage capacity has been allocated under the National Programme on Advanced Chemistry Cell (ACC) Battery Storage.
Focus on R&D and Domestic Manufacturing
The government is also prioritising indigenous technology development through the Renewable Energy Research and Technology Development Programme, which supports research institutions and industry partners in developing cost-effective energy storage solutions.
Furthermore, the Department of Science and Technology (DST), under the Clean Energy Material Initiative (CEMI), is funding multiple R&D projects focused on advanced energy storage materials and devices, strengthening domestic innovation and manufacturing capabilities.
Rising Shift Towards Storage-Backed Renewables
With the declining cost of renewable energy integrated with storage and the growing demand for dispatchable clean power, distribution companies (DISCOMs) and bulk consumers are increasingly favouring storage-backed renewable solutions.
In this context, the government has advised Renewable Energy Implementing Agencies (REIAs), including SECI, NTPC, NHPC, and SJVN, to transition from conventional renewable tenders to storage-linked tenders, peak power supply configurations, and Firm and Dispatchable Renewable Energy (FDRE) tenders.
As of December 31, 2025, REIAs have issued Letters of Award (LoAs) for approximately 69 GW of renewable energy capacity, while Power Purchase Agreements (PPAs) have been signed for around 24.3 GW.
Boosting PPA Execution and State Participation
To accelerate PPA execution, the government has urged states to comply with Renewable Consumption Obligations under the Energy Conservation Act and directed REIAs to aggregate demand from DISCOMs and large consumers prior to tender issuance. Regional workshops have also been conducted with major renewable energy procuring states to address implementation challenges and fast-track project deployment.
Meanwhile, states are actively advancing renewable capacity additions through state-level tenders and commercial and industrial (C&I) green energy open access and captive models, facilitating capacity growth across multiple procurement channels.
The details were shared by Union Minister of State for New and Renewable Energy, Shri Shripad Yesso Naik, in a written reply to the Rajya Sabha, reaffirming the government’s commitment to building a robust energy storage ecosystem to support India’s clean energy transition.
