India has taken a step to support its renewable energy transition by approving a ₹5,400 crore Viability Gap Funding (VGF) scheme for the construction of 30 GWh of Battery Energy Storage Systems (BESS), which will help to manage the variability of solar and wind energy and to provide 24×7 clean energy availability. Of the ₹5,400 crore allocation, 25 GWh will go to state projects, while 5 GWh will go to NTPC.
The scheme provides a single, one-time subsidy of ₹18 lakh per MWh, and projects will be implemented through tariff-based competitive bidding and the BOO/BOOT models.
Projects are expected to provide 2-hour discharge durations and operate at about 1.5 charge cycles/day. Also, the Indian government has extended the waiver of ISTS (Inter-State Transmission System) charges for BESS and pumped hydro storage projects to June 2028, which could make these investments more economically viable.
How is this important for India?
This is important as India plans to have 393 GW of renewables by 2030, including 293 GW of solar and 100 GW of wind. Notably, peak power demand reached 241 GW in June 2025, and further increase to 270 GW this summer (as per CEA).
A battery energy storage system (BESS) is a set of components that stores electricity in batteries, along with inverters, cooling units, plus software that governs how and when the stored power is utilized.
BESS is not just a battery – it’s a full system implemented in large-scale energy systems as a mechanism to store excess electricity produced by solar and wind farms to allow that power to be discharged at a time and place where it is needed. This system helps ensure a reliable and consistent supply of electricity at all times and during peak demand or low generation times.
The key beneficiaries will be companies involved in power generation, storage, and infrastructure. NTPC will be receiving a direct allocation, while Hitachi Energy, Oriana Power, Exide Industries, Goldstar Power, Amara Raja Energy & Mobility, etc are also well-positioned because of their solar-plus-storage and battery ventures. Even EPCs and renewable IPPs can now offer DISCOMs low-cost 24/7 power with government support.
Written by Satyajeet Mukherjee
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