New Delhi: The Scheme for Viability Gap Funding (VGF) to foster the development of Battery Energy Storage Systems (BESS) received approval from the Union Cabinet, presided over by Prime Minister Narendra Modi.
Under this endorsed initiative, the aspiration is to cultivate 4,000 MWh of BESS projects by the year 2030-31. These projects will receive financial backing amounting to 40% of their capital cost, provided as budgetary support in the form of Viability Gap Funding (VGF). This landmark decision underscores the government’s dedication to a pro-environment agenda, as it anticipates a reduction in the cost of battery storage systems, thus enhancing their feasibility.
This scheme is strategically designed to harness the potential of renewable energy sources like solar and wind power, with the primary objective of delivering clean, dependable, and cost-effective electricity to the populace. The VGF for the BESS development scheme, with an initial allocation of Rs. 9,400 crore, including a budgetary allocation of Rs. 3,760 crore, underscores the government’s unwavering commitment to sustainable energy solutions.
By offering VGF support, the scheme aims to achieve a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50 to Rs. 6.60 per kilowatt-hour (kWh), making stored renewable energy an economically viable option for managing peak power demand nationwide. The disbursement of VGF funds will be carried out in five installments, tied to the various phases of BESS project implementation.
To ensure that the benefits of this scheme reach consumers, a minimum of 85% of the BESS project capacity will be earmarked for Distribution Companies (Discoms). This not only enhances the integration of renewable energy into the electricity grid but also minimizes wastage while optimizing the utilization of transmission networks. Consequently, this approach mitigates the need for expensive infrastructure upgrades.
The selection of BESS developers for VGF grants will be conducted through a transparent competitive bidding process, fostering a level playing field for both public and private sector entities. This approach promotes healthy competition and cultivates a robust ecosystem for BESS, attracting substantial investments and generating opportunities for associated industries.
The Government of India remains steadfast in its commitment to promoting clean and sustainable energy solutions. The BESS Scheme represents a significant stride towards realizing this vision. By harnessing the potential of renewable energy and encouraging the adoption of battery storage technology, the government envisions a brighter and greener future for all citizens.