Cabinet approves ₹14,500-crore VGF scheme for 92 GWh energy storage capacity

The Union Cabinet on Wednesday approved a ₹14,500-crore viability gap funding (VGF) scheme to support the development of 92 GWh of grid-scale energy storage capacity by 2030-31.

The scheme will provide financial support during FY27 to FY31 and help create new storage capacity equivalent to 170% of the country's existing grid-scale energy storage capacity, according to an official statement.

“We will implement this scheme in collaboration with state governments, ensuring that it is distributed across the country,” Union Information and Broadcasting Minister Ashwini Vaishnaw said at a Cabinet briefing.

The proposed capacity includes 60 GWh of hydro pumped storage projects, 30 GWh of battery energy storage systems (BESS) and 2 GWh through alternative energy storage technologies.

The projects are expected to entail a total investment of around ₹97,600 crore.

The initiative will help India meet its estimated grid-scale energy storage requirement of 411 GWh by 2031-32, the statement said.

The scheme is expected to support the deployment of large-scale storage infrastructure, improve grid stability and reduce dependence on conventional power generation for balancing supply and demand.

Projects will be allocated through a tariff-based competitive bidding process.

Public and private sector electricity distribution companies will be eligible for viability gap funding for battery storage and hydro pumped storage projects.

Projects based on alternative storage technologies can be implemented by both public and private sector entities.

In a push to promote domestic manufacturing, battery energy storage projects will have to meet a minimum domestic content requirement of 40%.

“The requirement will encourage domestic manufacturing, create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing,” the statement said.

The government said the scheme would complement existing supply-side incentives for battery manufacturing and strengthen India's domestic energy storage ecosystem.

The initiative is also expected to facilitate greater utilisation of renewable energy and support the availability of affordable, round-the-clock electricity.