Power storage VGF of Rs 15,000 crore in works

New Delhi: The government is working on a new viability gap funding (VGF) scheme for 112 gigawatt-hour energy storage projects with an outlay of around ₹15,000 crore, said people aware of the development. The capacity comprises 50 GWh of battery energy storage projects, 60 GWh of pumped storage projects and 2 GWh of new technologies of storage systems.

ET had reported earlier that a concept note on VGF scheme proposal for pumped storage projects and battery energy storage systems had been sent by the power ministry to the Department of Expenditure for approval.

Now the draft scheme has been circulated for inter-ministerial consultation, said one of the persons.


Queries emailed by ET to the power ministry did not elicit a response till press time.

Maintaining Grid Stability

The proposed scheme comes as India looks to accelerate deployment of storage infrastructure to support increasing share of renewable energy in the grid and manage growing peak demand. India has been witnessing record electricity consumption this summer, with the surge in post-sunset demand increasing the need for flexible generation and storage systems.

The scheme is also likely to support pumped storage projects, which are increasingly being seen as critical for long-duration energy storage and balancing renewable energy generation.

India is targeting 500 GW of non-fossil fuel capacity by 2030, which is expected to require substantial storage capacity to integrate intermittent renewable energy into the grid.

Storage systems will play a key role in maintaining grid stability, meeting evening peak demand and reducing renewable energy curtailment.

While a Viability Gap Funding (VGF) scheme for battery storage is under implementation, the new one aims to kick-start large-scale adoption by stakeholders amid variability in grid.

The earlier VGF scheme was launched in two tranches, supporting 13.2 GWh with 30% capital expenditure support, and thereafter 30 GWh with 16%. While the first VGF scheme is completely tendered, the second one is in progress, said one of the persons.

These schemes, however, did not have a pumped hydro storage component.

The Central Electricity Authority has projected the requirement of storage capacity at 235 GWh by 2029-30 and 888 GWh by 2035-36.