India Mandates Indigenous EMS Software for Battery Storage Projects Under VGF Scheme

The Ministry of Power (MoP) has issued a draft amendment on August 4, 2025, to the Principal Secretaries of the state energy departments. Through this amendment across 14 states, MoP mandates the indigenous development of application software for battery storage systems under the Viability Gap Funding (VGF) scheme.

In the amendment to the Operational Guidelines for the VGF scheme, supported by the Power System Development Fund (PSDF), the ministry notified Rajasthan, Gujarat, Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Madhya Pradesh, Telangana, Uttar Pradesh, Haryana, Kerala, Punjab, Chhattisgarh, Odisha, and Uttarakhand about the proposed changes.

Key Amendment

#1 Amendment to InSTS or ISTS Projects

The amendment was made to Clause 3.6 of the Operational Guidelines, clarifying that "The project may be connected at InSTS or ISTS. The responsibility for arranging grid connectivity and land shall be as per the RfS document."

#2 Supports Indigenous Software 

A new clause, 3.9, was inserted in the guidelines, stating: “The Application Software of the Energy Management System (EMS) of the BESS shall be developed indigenously within India.”

#3 Must Meet Quality Standard

In addition, a new provision was added under Guideline 4 – Eligible Entity / REIA Responsibilities, which mandates that the installed Battery Energy Storage System (BESS) must meet quality standards in line with best industry practices. It also prohibits the use of refurbished battery cells in the project.

About The Policy

In June 2025, 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.

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.