Centre Proposes ₹15,000-Crore Viability Gap Funding Scheme for Energy Storage Projects

The Government of India is preparing a new viability gap funding (VGF) scheme with a proposed outlay of ₹15,000 crore to support the creation of 112 GWh of energy storage capacity, a move aimed at strengthening grid reliability and accelerating the country's clean energy transition.

The proposed programme envisages the development of 50 GWh of Battery Energy Storage Systems (BESS), 60 GWh of pumped storage capacity, and 2 GWh of emerging energy storage technologies. The initiative is designed to enhance grid stability, facilitate the integration of renewable energy, and meet growing electricity demand, particularly during peak evening hours.

A concept note prepared by the Ministry of Power has been submitted for approval, while the draft scheme is currently undergoing inter-ministerial consultations. The programme is expected to play a key role in supporting India's target of achieving 500 GW of non-fossil fuel-based power capacity by 2030 by providing the storage infrastructure needed to manage the intermittency of renewable energy sources.

The proposed scheme builds on earlier VGF initiatives that supported 43.2 GWh of battery storage projects but did not cover pumped hydro storage. According to projections by the Central Electricity Authority (CEA), India's energy storage requirement is expected to rise sharply to 235 GWh by 2029-30 and further to 888 GWh by 2035-36, underscoring the need for substantial investments in storage infrastructure.