Govt Picks 15 States, NTPC To Offer VGF Support For BESS

Govt Picks 15 States, NTPC To Offer VGF Support For BESS

The Ministry of Power has approved a ₹5,400 crore ($650 million) viability gap funding (VGF) scheme aimed at accelerating the deployment of Battery Energy Storage Systems (BESS) across the country, according to a latest notification issued by the Ministry of Power.

Funded through the Power System Development Fund (PSDF), the scheme will support the development of 30 GWh of BESS capacity in a bid to bolster the integration of renewable energy into the national grid and ensure power reliability by addressing the intermittency of solar and wind sources.

NTPC & 15 States Targeted 

The programme allocates 25 GWh to 15 states and 5 GWh to state-run utility NTPC, with the latter expected to leverage existing thermal and transmission infrastructure to meet non-solar hour electricity demand.

Key Allocations:

4,000 MWh each: Rajasthan, Gujarat, Maharashtra, Tamil Nadu

2,000 MWh each: Karnataka, Andhra Pradesh, Madhya Pradesh, Telangana, Uttar Pradesh

500 MWh each: Haryana, Kerala, Punjab, Chhattisgarh, Odisha, Uttarakhand

5,000 MWh: NTPC

The scheme will provide a fixed financial support of ₹18 lakh per MWh, classifying it as non-recurring expenditure fully covered by the PSDF.

Eligibility and Bidding:

Eligible participants include state utilities, agencies authorised by state or central governments, and Renewable Energy Implementing Agencies (REIAs). All proposals must be submitted to the National Load Despatch Centre (NLDC) within 30 days of notification.

Projects will be awarded through a tariff-based competitive bidding (TBCB) process, with contracts set for 12–15 years under either Build-Own-Operate (BOO) or Build-Own-Operate-Transfer (BOOT) models. Bidders will compete based on the annualised fixed cost, adjusted for the VGF amount.

Project Timelines and Requirements:

Projects under the scheme must be commissioned within 18 months from the signing of a Battery Energy Storage Purchase Agreement (BESPA) or Power Purchase Agreement (PPA). The preferred storage configuration includes a two-hour discharge duration with an average of 1.5 cycles per day. The viability gap funding will be disbursed in three tranches: 20% upon financial closure with a bank guarantee, 50% at the commercial operation date (COD), and the remaining 30% after one year of COD.

Oversight and Revisions:

The Central Electricity Authority (CEA) will monitor implementation through a digital portal and monthly reporting. The Ministry of Power retains the authority to revise guidelines to address operational challenges.

India, aiming for 500 GW of non-fossil fuel capacity by 2030, sees large-scale battery storage as critical to managing fluctuations in renewable generation and ensuring round-the-clock power supply.