Grant of Rs 3,760 crore to prop battery storage system announced

The Union Cabinet on Wednesday approved a Rs 3,760 crore grant scheme to support the development of battery energy storage systems that would help bring down the cost of storage of renewable energy in the country. 

The new scheme envisages development of 4,000 MWh of battery energy storage systems by 2030-31. The government will provide financial support of up to 40% of the capital cost as budgetary support in the form of “viability gap funding”.

“This a 100% central grant,” Union Minister Anurag Thakur said at a media briefing after the cabinet meeting.  

The scheme targets achieving a levelised cost of storage ranging from Rs 5.50-6.60 per kilowatt-hour (kWh), making stored renewable energy a viable option for managing peak power demand across the country.

The viability gap funding shall be disbursed in five tranches linked with the various stages of implementation of the Battery Energy Storage Systems (BESS) projects. The grant scheme is likely to attract over Rs 9,500 crore investments in battery storage systems.
The selection of BESS developers for the viability gap funding grants will be carried out through a  transparent competitive bidding process, promoting a level playing field for both public and private sector entities, according to an official statement released after the cabinet meeting.

“This approach will foster healthy competition and encourage the growth of a robust ecosystem for BESS, attracting significant investments and generating opportunities for associated industries,” it added.

According to the minister, a minimum of 85% of the Battery Energy Storage Systems project capacity would be made available to Distribution Companies (Discoms). This will not only enhance the integration of renewable energy into the electricity grid but also minimise wastage while optimising the utilisation of transmission networks. Consequently, this will reduce the need for costly infrastructure upgrades.