The Union Cabinet has approved the “Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS),” a government release said.
The approved scheme envisages development of 4,000 MWh of BESS projects by 2030-31, with financial support of up to 40 per cent of the capital cost as budgetary support in the form of viability gap funding.
The move is expected to bring down the cost of battery storage systems increasing their viability, the release said.
Making stored RE a viable option
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 citizens. The VGF for development of BESS Scheme, with an initial outlay of Rs.9,400 crore, including a budgetary support of Rs.3,760 crore, 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 per kwh to Rs.6.60 per 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.
Priority to discoms
To ensure that the benefits of the scheme reach the consumers, a minimum of 85 per cent of the BESS project capacity will be made available to 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.
Transparent bidding process
The selection of BESS developers for VGF grants will be carried out through transparent competitive bidding process, promoting a level playing field for both public and private sector entities. This approach will foster healthy competition and encourage the growth of a robust ecosystem for BESS, attracting significant investments and generating opportunities for associated industries.
VGF can play a critical role
Reacting to the VGF proposal for BESS, Pankaj Sharma, Co-founder & Director, Log9 Materials, said, “This is a welcome move from the government. Since battery storage technologies are in nascent stages, viability gap funding would play a critical role in bridging the development cost that battery manufacturers need during technology development stages. This will also come in handy for pre-commercial battery projects to reach commercial stage. Moreover, this funding from the government has the benefit of bringing non-dilutive capital to battery tech companies thus lowering the pressure of fund raising during the early technology development stage of various battery tech startups.”
Headquartered in Bengaluru, Log9 Materials is an advanced battery technology and deep-technology startup that recently launched India’s first cell manufacturer line. This is also South Asia’s largest battery cell manufacturing plant, it is learnt.
Featured photograph is for representation only
