Govt's 2nd VGF boosts battery energy storage systems development: IESA

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Industry body India Energy Storage Alliance on Wednesday hailed the government's announcement of the second tranche of the viability gap funding to boost the development of standalone Battery Energy Storage Systems.

The scheme aligns with the government's ambitious goal of achieving 30 GWh of energy storage capabilities distributed among 15 states with support from NTPC, the India Energy Storage Alliance (IESA) said in a statement.

It aims to attract an investment of ₹33,000 crore, fulfilling the country's BESS requirements by 2028. 

IESA believes that India Energy Storage Week 2025 will further accelerate this initiative by bringing together industry leaders, stakeholders, and investments from around the globe, the statement said.

A viability gap funding (VGF) of ₹18 lakh ($21,043)/MWh will be provided to support the development of 30 GWh of BESS capacity under this tranche.

The funding will be sourced from the Power System Development Fund (PSDF), with a total financial outlay of about ₹5,400 crore ($631.30 million).

This initiative promises to enhance energy security and facilitate optimal utilisation of existing thermal generation and transmission infrastructure to meet electricity demands during non-solar hours, the statement said.

As the need for BESS is projected to grow, reaching 37 GWh by 2027 and 236 GWh by 2032, according to the Central Electricity Authority (CEA), the timely implementation of these measures is crucial for the future of energy storage in India. 

Vinayak Walimbe, Managing Director of Customized Energy Solutions (CES), said, "The second tranche of viability gap funding will not only drive investment but also foster innovation and collaboration across the energy sector".

Debmalya Sen, President of the IESA, further stated, "The requirement under the Guideline for the Power Supply Agreement (PSA) to be signed within nine months is a significant development that will expedite project signing".

IESA is hosting the 11th edition of India Energy Storage Week (IESW), taking place in Delhi from July 8-10, aims to boost India's energy transition and global partnerships to further accelerate the government's vision for the country's battery energy storage systems (BESS) development in India.