India approves $1.5 billion scheme for development of 92 GWh ESS
The Viability Gap Funding (VGF) scheme will support creation of new capacities equivalent to 170% of the present-day grid-scale energy storage system (ESS) capacity in India, and help meet the required grid-scale ESS capacity of 411 GWh by 2031-32.
The Indian government has approved a Viability Gap Funding (VGF) scheme for the development of grid-scale energy storage systems (ESS), with a total financial support of INR 145 billion (about USD 1.5 billion) for the period FY 2026-27 to FY 2030-31.
The scheme aims to support the development of 92 GWh of, yet to be commissioned, energy storage capacity across the country. The scheme will support creation of new capacities equivalent to 170% of the present-day grid-scale energy storage system capacity in the country and help meet the required grid-scale ESS capacity of 411 GWh by 2031-32, the government said.
“The scheme marks a significant step towards strengthening India's power sector infrastructure, facilitating large-scale integration of renewable energy and ensuring reliable, affordable and round-the-clock power supply,” the government said. “It will also provide an impetus to domestic manufacturing of battery energy storage systems, reduce import dependence and enhance the country's long-term energy security.”
The scheme envisages the development of 60 GWh of Hydro Pumped Storage Plant (PSP) capacity, 30 GWh of BESS capacity and 2 GWh of capacity through alternative energy storage technologies, with a total estimated investment of INR 976 billion (about USD 10.4 billion). The VGF support is expected to help improve the financial viability of these projects and accelerate the deployment of large-scale energy storage infrastructure in the country.
A key objective of the scheme is to strengthen India’s domestic energy storage manufacturing ecosystem through demand-side financial support and reduce dependence on imported components. To promote indigenous manufacturing, BESS projects will be subject to a minimum Domestic Content Requirement (DCR) of 40%. The requirement will encourage domestic manufacturing, create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing, the government said.
