Cabinet Approves Rs 3,760cr For VGF Scheme On Battery Storage

Cabinet Approves Rs 3,760cr For VGF Scheme On Battery Storage

Union Minister Anurag Thakur said that the Union Cabinet today approved a special scheme of Viability Gap Funding (VGF) for the battery energy storage system manufacturers in India. After the Cabinet meeting, he briefed the media on the issue today in New Delhi. Prime Minister Narendra Modi chaired the meeting. The announcement came days before the G20 Summit in the national capital.

The minister said that the facility will be a central grant and likely to boost renewable energy production and its deployment besides ensuring grid stability. “The Cabinet has approved Viability Gap Funding (VGP) for battery storage systems in the country. It allocated Rs 3,760 crore for the scheme to boost the BESS manufacturing capacity in India. It will be a 100 percent central grant,” he said

“This will help balance the surplus solar production with these energy storage systems. India has planned to have 50 percent of its total energy share from non-fossil fuels by 2030. So, to make renewable energy more viable, we need to strengthen the BESS. This scheme will aid in adding 4,000 MWh of power through this scheme. It will be active for the next three years till 2026. VGF will be given as support. This will be subject to 40 percent of the total capital cost. It will done in phases,” he added.

The minister said that while projects will be sanctioned during the initial three years, funds will be disbursed based on five trenches till 2030-31. “The benefit will go to the consumers of discoms. The beneficiary of the scheme has to ensure 85% of their contribution goes to the discoms, whereas they can use the remaining for other consumers,” he said.

Thakur said that this can aid in using renewable power during peak hours. The minister said that this can help reduce fossil fuel dependency. “This will lead to more than Rs 9,500 crore investment in the sector,” he added.

The minister said that the technology is expensive in nature and there had been a shortage of battery energy storage system manufacturing in the country.

“While solar and wind are increasing, we do not have enough battery storage capacity. So, we needed a VGF funding scheme for the sector,” he said.