The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Viability Gap Funding (VGF) scheme of Rs 14,500 crore to develop 92 GWh of new grid-scale energy storage capacity across India between FY 2026-27 and FY 2030-31.
The initiative aims to enhance the stability of the power grid, improve the utilization of renewable energy and help ensure a reliable and affordable round-the-clock power supply for consumers.
Of the proposed capacity, 60 GWh will be derived from Hydro Pumped Storage Plants (PSP), 30 GWh from Battery Energy Storage Systems (BESS) and 2 GWh from alternative energy storage technologies. The projects are estimated to involve a total investment of ₹97,600 crore.
To promote domestic manufacturing and reduce reliance on imported components, BESS projects will be subject to a minimum Domestic Content Requirement (DCR) of 40%. This provision is expected to boost battery manufacturing within the country and further strengthen the incentive measures already being provided by the government for this sector.
The allocation of capacity will be carried out through a tariff-based competitive bidding process. Public and private sector power distribution companies will be eligible for VGF support for battery energy storage and pumped storage projects, while alternative energy storage projects will be open to both public and private sector entities.
According to the government, the proposed 92 GWh capacity addition is equivalent to around 170% of India’s existing grid-scale energy storage capacity. The country is projected to require 411 GWh of storage capacity by FY 2031-32. The scheme aims to improve renewable energy utilisation, strengthen grid stability, reduce reliance on conventional power sources and enhance India’s energy security.
This initiative is part of the government’s efforts to promote the country’s self-reliance in the energy sector, in line with the goals of ‘Atmanirbhar Bharat’ and ‘Viksit Bharat’ (Developed India).
(PIB)
