Cabinet Approves Rs 145 bn Storage Funding Scheme
POWER & RENEWABLE ENERGY

Cabinet Approves Rs 145 bn Storage Funding Scheme

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Viability Gap Funding scheme for developing grid-scale energy storage systems, with financial support of Rs. 145 bn between FY26-27 and FY30-31. The scheme will support 92 GWh of new, yet-to-be-commissioned storage capacity across India.

The planned capacity represents 170 per cent of the country’s present grid-scale energy storage capacity and will contribute towards meeting the estimated requirement of 411 GWh by 2031-32. The initiative is intended to support the large-scale integration of renewable energy and ensure reliable, affordable and round-the-clock electricity supply.

The scheme covers 60 GWh of Hydro Pumped Storage Plant (PSP) capacity, 30 GWh of Battery Energy Storage System (BESS) capacity and 2 GWh based on emerging storage technologies. The projects are expected to attract total investment of Rs. 976 bn, while viability gap funding will improve their financial feasibility and accelerate the deployment of large-scale infrastructure.

Storage capacity will be allocated through a tariff-based competitive bidding process. Public and private sector electricity distribution companies will be eligible for support for BESS and Hydro PSP projects, while public and private entities will be able to implement projects using alternative storage technologies.

BESS projects will be required to meet a minimum Domestic Content Requirement of 40 per cent, supporting indigenous manufacturing and reducing dependence on imported components. The government expects the measure to create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing. Increased storage deployment is also expected to improve grid stability, address variability in renewable generation, reduce reliance on conventional balancing capacity and strengthen India’s long-term energy security.

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Viability Gap Funding scheme for developing grid-scale energy storage systems, with financial support of Rs. 145 bn between FY26-27 and FY30-31. The scheme will support 92 GWh of new, yet-to-be-commissioned storage capacity across India. The planned capacity represents 170 per cent of the country’s present grid-scale energy storage capacity and will contribute towards meeting the estimated requirement of 411 GWh by 2031-32. The initiative is intended to support the large-scale integration of renewable energy and ensure reliable, affordable and round-the-clock electricity supply. The scheme covers 60 GWh of Hydro Pumped Storage Plant (PSP) capacity, 30 GWh of Battery Energy Storage System (BESS) capacity and 2 GWh based on emerging storage technologies. The projects are expected to attract total investment of Rs. 976 bn, while viability gap funding will improve their financial feasibility and accelerate the deployment of large-scale infrastructure. Storage capacity will be allocated through a tariff-based competitive bidding process. Public and private sector electricity distribution companies will be eligible for support for BESS and Hydro PSP projects, while public and private entities will be able to implement projects using alternative storage technologies. BESS projects will be required to meet a minimum Domestic Content Requirement of 40 per cent, supporting indigenous manufacturing and reducing dependence on imported components. The government expects the measure to create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing. Increased storage deployment is also expected to improve grid stability, address variability in renewable generation, reduce reliance on conventional balancing capacity and strengthen India’s long-term energy security.

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