India’s Union Cabinet has approved ₹14,500 crore ($1.53 billion) in viability gap funding to support the development of 92 gigawatt-hours (GWh) of grid-scale energy storage capacity between fiscal years 2026-27 and 2030-31.
The scheme is designed to mobilize an estimated ₹97,600 crore in total project investment, as the country seeks to integrate more renewable electricity and improve the flexibility of its power system.
The program allocates 60 GWh to pumped storage, 30 GWh to battery energy storage systems (BESS), and 2 GWh to alternative storage technologies. The planned capacity represents an addition equivalent to 170% of India’s current grid-scale energy storage capacity, according to the Ministry of Power. The government estimates that India will need 411 GWh of storage capacity by fiscal year 2031-32.
The funding addresses a key challenge in India’s energy transition. As solar and wind generation expand, the power system must accommodate fluctuations in output while maintaining reliable electricity supplies. Storage can shift electricity from periods of high generation to periods of stronger demand, but deployment depends on project economics, grid access and the timely delivery of infrastructure.
Pumped storage dominates the planned capacity
Pumped storage accounts for nearly two-thirds of the scheme’s 92 GWh target. These facilities use electricity to pump water to an upper reservoir, then release it through turbines to generate power when needed. Their contribution will depend on suitable sites, water availability, environmental approvals and the construction of reservoirs, tunnels, waterways and associated power infrastructure.
The scale of the allocation indicates that India is pursuing storage beyond battery installations alone. Pumped storage can provide substantial energy capacity over extended periods, although development generally involves longer construction timelines and more site-specific engineering than modular battery projects. Whether the allocated capacity can be delivered within the scheme’s five-year funding period will depend on project readiness and the progress of individual developments.
Battery systems account for the remaining 30 GWh of the main established technology categories. They can be deployed alongside renewable energy projects, at substations or elsewhere on the grid, depending on connection requirements and the services being procured. Their potential uses include shifting solar generation into evening demand periods and supporting grid operations.
However, the 30 GWh allocation is an energy-capacity target, not a measure of instantaneous power output. The duration for which a battery can discharge depends on its rated power and usable energy capacity. Project specifications and procurement terms will therefore be important in determining how much flexibility the supported systems can provide.
The ₹14,500 crore viability gap funding package is expected to help projects attract private and public investment by reducing the financial gap between development costs and commercially viable returns. Against the estimated ₹97,600 crore total investment, the government support amounts to approximately 15% of the projected capital requirement.
The scheme will allocate storage capacity through tariff-based competitive bidding. Public and private sector electricity distribution companies will be eligible for support for battery and pumped storage projects, while alternative technology projects can be implemented by public and private sector entities, according to the official announcement.
Competitive procurement may help identify lower-cost projects, but the final economics will depend on more than construction costs. Revenue arrangements, utilization rates, charging costs, financing terms and the value of services provided to the grid will influence whether storage assets can operate commercially over their lifetimes.
The announcement does not establish that the full investment has been committed or that all targeted projects have reached financial close. The 92 GWh figure represents capacity the scheme aims to support, rather than capacity already under construction or commissioned.
Battery projects supported by the scheme must meet a minimum domestic content requirement of 40%. The policy is intended to strengthen local manufacturing and reduce dependence on imported components, while creating demand for equipment and services within India’s energy storage supply chain.
The requirement could influence procurement strategies, supplier selection and project costs. Its impact will depend on the availability, quality and pricing of eligible domestic components, as well as the rules used to determine compliance. If local supply cannot meet project requirements competitively, developers may face trade-offs between localization targets, delivery schedules and equipment costs.
The allocation of 2 GWh to alternative storage technologies provides a separate route for technologies beyond batteries and conventional pumped storage. However, the Cabinet announcement does not specify which technologies will qualify or how their performance will be assessed. Procurement criteria will be important in determining whether this allocation supports commercially deployable alternatives or remains a smaller experimental component of the program.
Delivery and grid integration will determine the outcome
The scheme forms part of India’s broader effort to build the infrastructure required for a power system with a growing share of renewable generation. Storage can reduce curtailment and help match electricity supply with demand, but it cannot compensate for every constraint in the electricity network. Transmission capacity, connection delays, land availability and project approvals can all affect deployment.
The program’s implementation will also require coordination between developers, distribution companies, transmission operators, equipment suppliers and state authorities. Pumped storage projects may require extensive civil works and environmental clearances, while battery projects need suitable sites, grid connections, control systems and appropriate fire-safety provisions.
The government’s target of 411 GWh of grid-scale storage by fiscal year 2031-32 underscores the scale of the longer-term requirement. The new scheme is intended to contribute to that target, but its effectiveness will be measured by the capacity that secures financing, reaches construction and enters commercial operation.
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