India’s Strategic Shift to 13,200 MWh Insights on India’s revised battery storage targets reveal a threefold increase, from 4,000 MWh to 13,200 MWh under the Viability Gap Funding (VGF) scheme.
This ambitious expansion aligns with documented reductions in battery energy storage system (BESS) costs, ensuring no additional financial burden beyond the pre-allocated ₹3,760 crore budget—a specific point underscored by the Indian government’s Standing Committee on Energy. Supported by VGF, the strategy provides a capital subsidy dispensed in stages—beginning with 10% at financial closure, followed by 45% at commissioning, and subsequently 15% annually across three years post-commissioning.
This phased funding approach aims for all project contracts to conclude by June 2025, with an implementation period forecasted to span 18 to 24 months. Distributing the augmented 13,200 MWh capacity encapsulates three key components. Primarily, the market segment sees an allocation of 2,200 MWh designated to NTPC Vidyut Vyapar Nigam (NVVN) and the Solar Energy Corporation of India (SECI), featuring a VGF of ₹46 lakh/MWh for the first tranche and ₹27 lakh/MWh for the second.
The state segment allocates 6,000 MWh distributed among key states including Rajasthan, Tamil Nadu, Karnataka, Gujarat, Maharashtra, Telangana, Bihar, and Kerala, each enjoying VGF support of ₹27 lakh/MWh. Finally, the Central Public Sector Undertaking (CPSU) component assigns 5,000 MWh to NVVN, NHPC, and SJVN, adopting the same VGF framework as the state-led projects. The declining expense in BESS technology underpins the capacity increase.
“With the reduction in BESS costs, we anticipate implementing higher storage capacity within the same budget,” the Standing Committee on Energy acknowledges within its report. Project execution processes illuminate current progression stages. For example, bidder selection for the initial 500 MW/1,000 MWh BESS capacity was realized by October 2024, leading to Battery Energy Storage Purchase Agreements (BESPA) signed by NVVN in December 2024.
Moreover, under the state segment, Letters of Award (LoAs) signify progress, including allotments of 1,000 MWh for Gujarat, 500 MWh for Maharashtra, and another 1,000 MWh dedicated to Rajasthan. Yet, questions surrounding implementation timelines persist. As per the Ministry of Power, all pending contracts are anticipated by June 2025, with project completion requiring approximately two years post-contract.
“This will take two years, and we have set a June 2025 deadline for all states and implementing agencies to finalize project contracts,” remarked the power secretary before the committee. This undertaking forms part of an overarching governmental directive to bolster India’s energy storage infrastructure, thus solidifying the reliability of the renewable energy grid. Such initiatives resonate deeply with India’s objective to achieve a 500 GW non-fossil fuel capacity by 2030.
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