Union Cabinet approves viability gap funding for development of BESS

The Union Cabinet has approved the scheme for viability gap funding (VGF) for development of battery energy storage systems (BESS).

The approved scheme envisages development of 4,000 MWh of BESS projects by 2030-31, with a financial support of up to 40 per cent of the capital cost as budgetary support in the form of VGF. The VGF for the BESS will have an initial outlay of Rs 94 billion and this will include a budgetary grant of Rs 37 billion. VGF will be disbursed in five tranches and be linked with the various stages of implementation of BESS projects. By offering VGF support, the scheme targets achieving a levelised cost of storage ranging from Rs 5.50-6.60 per kWh, making stored renewable energy a viable option for managing peak power demand across the country.