In a historic and forward-looking move that underscores the Indian government’s unwavering dedication to environmental sustainability, the Union Cabinet, led by Prime Minister [Prime Minister’s Name], has given its resounding approval to the groundbreaking Scheme for Viability Gap Funding (VGF) aimed at accelerating the development of Battery Energy Storage Systems (BESS).
The newly approved scheme sets ambitious targets, with its sights firmly fixed on the development of 4,000 megawatt-hours (MWh) of BESS projects by the fiscal year 2030-31. What makes this initiative even more remarkable is that it offers financial incentives in the form of budgetary support, covering up to 40% of the capital cost, through Viability Gap Funding (VGF). This strategic move is poised to be a game-changer in the realm of renewable energy, potentially driving down the cost of battery storage systems and making them more financially feasible.
Designed to harness the immense potential of renewable energy sources like solar and wind power, the scheme’s primary objective is to provide clean, reliable, and affordable electricity to the Indian populace. The VGF for BESS development Scheme, boasting an initial allocation of Rs. 9,400 crore, including a budgetary allocation of Rs. 3,760 crore, underlines the government’s steadfast commitment to sustainable energy solutions.
By extending VGF support to BESS projects, the scheme aspires to achieve a Levelized Cost of Storage (LCoS) ranging between Rs. 5.50 and Rs. 6.60 per kilowatt-hour (kWh). This cost-effective target makes stored renewable energy an economically attractive option for addressing peak power demand across the country. To ensure efficient allocation and utilization of resources, the VGF disbursement will be distributed across five tranches, closely linked to the various stages of BESS project implementation.
An integral aspect of this visionary scheme is its commitment to benefiting consumers directly. To achieve this, a minimum of 85% of the BESS project capacity will be reserved for Distribution Companies (Discoms). This dual-pronged approach not only facilitates the seamless integration of renewable energy into the national electricity grid but also minimizes energy wastage while optimizing the utilization of existing transmission networks. Consequently, this approach reduces the need for costly infrastructure upgrades, thereby promoting fiscal responsibility.
The selection of BESS developers eligible for VGF grants will be conducted through a transparent and competitive bidding process. This equitable approach fosters a level playing field for both public and private sector entities, nurturing healthy competition, and paving the way for the growth of a robust ecosystem for BESS. This, in turn, is expected to attract significant investments and generate ample opportunities for allied industries, further boosting India’s clean energy sector.
The approval of the Scheme for Viability Gap Funding for Battery Energy Storage Systems represents a monumental step forward for India’s renewable energy landscape. It showcases the government’s commitment to sustainable energy solutions, affordability, and environmental preservation. This initiative not only positions India as a global leader in renewable energy but also promises to usher in a brighter, cleaner, and more sustainable future for all.
