The Union Cabinet has approved the Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS). VGF for development of BESS Scheme has an initial outlay of Rs.9,400 crore, including a budgetary support of Rs.3,760 crore.

The Rs.3,760 crore viability gap funding (VGF) will be borne by the central government. 

What is Battery Energy Storage Systems (BESS)?
Battery storage, or battery energy storage systems (BESS), are devices that enable energy from renewables, like solar and wind, to be stored and then released when the power is needed most.

Scheme for Viability Gap Funding (VGF)
The approved scheme envisages development of 4,000 MWh of BESS projects by 2030-31, with a financial support of up to 40% of the capital cost as budgetary support in the form of Viability Gap Funding (VGF).

The move is expected to bring down the cost of battery storage systems increasing their viability.
Designed to harness the potential of renewable energy sources such as solar and wind power, the scheme aims to provide clean, reliable, and affordable electricity to the citizens. 

The VGF for development of BESS Scheme signifies the government's commitment to sustainable energy solutions. 

By offering VGF support, the scheme targets achieving a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50-6.60 per kilowatt-hour (kWh), making stored renewable energy a viable option for managing peak power demand across the country. 

The VGF shall be disbursed in five tranches linked with the various stages of implementation of BESS projects.

To ensure that the benefits of the scheme reach the consumers, a minimum of 85% of the BESS project capacity will be made available to Distribution Companies (Discoms).

This will not only enhance the integration of renewable energy into the electricity grid but also minimize wastage while optimizing the utilization of transmission networks. 

Consequently, this will reduce the need for costly infrastructure upgrades.

The selection of BESS developers for VGF grants will be carried out through a  transparent competitive bidding process, promoting a level playing field for both public  and private sector entities.

Benefits of Battery storage 

Battery storage technology has a key part to play in ensuring homes and businesses can be powered by green energy, even when the sun isn’t shining or the wind has stopped blowing.