India is making a major push toward its clean energy goals with the launch of a new ₹5,400 crore funding package aimed at developing Battery Energy Storage Systems (BESS). This initiative will help establish 30 GWh of storage capacity, supplementing an earlier ₹3,700 crore incentive for 13.2 GWh. In total, the combined government and private sector investment in the energy storage sector is expected to reach ₹33,000 crore. The primary goal is to provide round-the-clock renewable power supply and strengthen grid stability.
Viability Gap Funding (VGF) for BESS
The new funding falls under the Viability Gap Funding (VGF) scheme, which supports infrastructure projects that are not financially feasible without government assistance. The ₹5,400 crore allocation is intended to attract private investment in the battery storage segment and accelerate India’s transition to cleaner energy.
Importance of Battery Energy Storage Systems
As renewable energy sources like solar and wind continue to grow, energy storage becomes critical to manage their intermittent nature. BESS allows excess energy generated during off-peak hours to be stored and then used during peak demand periods. This ensures a reliable and consistent energy supply, reducing reliance on fossil fuels.
Pumped Storage Projects (PSPs)
Alongside BESS, Pumped Storage Projects are gaining attention as large-scale energy storage solutions. These hydro-based systems operate by moving water between two reservoirs at different elevations. Water is pumped to the upper reservoir during low demand and released to generate electricity during high demand, acting as a natural energy buffer.
Transmission Waivers and Infrastructure Upgrades
To further encourage investment, the government has extended the 100% waiver on inter-state transmission system (ISTS) charges for both BESS and PSPs until June 30, 2028. Additionally, an investment of ₹53,000 crore has been approved to enhance the Ultra High Voltage Alternating Current (UHVAC) transmission system, which includes nine major high-voltage lines planned by 2034.
Right of Way (RoW) Compensation Revision
To expedite the rollout of critical energy infrastructure, the government has revised the compensation structure under the Right of Way (RoW) rules. Landowners will now receive enhanced compensation for land used for tower installations, improving cooperation and speeding up project implementation.
Future Storage Requirements
According to the Central Electricity Authority, India will need 37 GWh of battery storage capacity by 2027 and 236 GWh by 2031–32 to support its growing renewable energy demands. The new funding initiative positions India to meet its FY28 target of 43.2 GWh, aligning with national energy security and sustainability goals.