Cabinet Approves ₹14,500-Crore Energy Storage Plan

CABINET APPROVES ₹14,500-CRORE ENERGY STORAGE SCHEME

WHY IN THE NEWS ?

The Union Cabinet approved a ₹14,500-crore Viability Gap Funding (VGF) Scheme for grid-scale energy storage during 2026-27 to 2030-31. It aims to support 92 GWh of new storage capacity and strengthen India’s renewable energy integration and grid stability.

CABINET APPROVES ₹14,500-CRORE ENERGY STORAGE SCHEME

VGF SCHEME: KEY FEATURES AND TARGETS

  • Financial Support: The scheme has a total outlay of ₹14,500 crore to promote large-scale energy storage infrastructure across India.
  • Implementation Period: It will operate for five years, covering 2026-27 to 2030-31.
  • Capacity Creation: The initiative aims to support 92 GWh of new, yet-to-be-commissioned energy storage capacity.
  • Project Composition: The planned capacity includes:
    • 60 GWh through hydro pumped storage plants (PSPs).
    • 30 GWh through battery energy storage systems (BESS).
    • 2 GWh through alternative energy storage technologies.
  • Investment Requirement: The supported projects are expected to attract an estimated total investment of approximately ₹97,600 crore.
  • Selection Process: Energy storage projects will be allocated through a tariff-based competitive bidding process.
  • Eligible Participants: Both public and private sector electricity distribution companies (DISCOMs) will be eligible for VGF support for BESS and pumped storage projects.
  • Capacity Contribution: The proposed 92 GWh capacity is equivalent to approximately 170% of India’s existing grid-scale storage capacity, according to the government.

SIGNIFICANCE FOR INDIA’S ENERGY TRANSITION

  • Grid Stability: Energy storage helps balance electricity demand and supply, reducing fluctuations caused by renewable energy generation.
  • Renewable Integration: It enables surplus solar and wind electricity to be stored and used when generation is low or demand is high.
  • Investment Promotion: VGF improves the financial viability of capital-intensive storage projects and encourages private-sector participation.
  • Manufacturing Boost: The scheme is expected to provide an impetus to domestic BESS manufacturing, supporting India’s clean-energy industrial ecosystem.
  • Energy Security: Large-scale storage can reduce dependence on conventional power sources and improve electricity supply reliability.
  • Long-Term Target: The initiative supports India’s requirement of approximately 411 GWh of grid-scale energy storage by 2031-32.

ABOUT ENERGY STORAGE TECHNOLOGIES:

●      Energy Storage System (ESS): Technologies that store electricity or energy for later use, helping balance the power grid.

●      Battery Energy Storage System (BESS): Stores electricity in rechargeable batteries, commonly lithium-ion batteries, and releases it when required.

●      Pumped Storage Plant (PSP): Uses surplus electricity to pump water to an upper reservoir and generates electricity by releasing it through turbines.

●      Viability Gap Funding: Government financial assistance provided to economically desirable but financially unviable infrastructure projects to improve their commercial feasibility.