The Union Cabinet has given its nod to a groundbreaking scheme aimed at bolstering India’s renewable energy sector by supporting the development of a 4 gigawatt (GW) battery energy storage system (BESS) by 2030-31. This scheme will provide viability gap funding (VGF) to make battery storage more economically viable, with a focus on enhancing the integration of solar and wind energy into the grid.
- The VGF scheme for BESS projects boasts an initial outlay of Rs 9,400 crore.
- It includes a budgetary grant of Rs 3,700 crore, showcasing a substantial government commitment to advancing energy storage technology.
- The VGF will be disbursed in five tranches, strategically linked to the various stages of BESS project implementation.
Renewable Energy Focus:
- The primary objective of this scheme is to address the energy storage needs of the renewable energy sector, particularly solar and wind power.
Cost Reduction and Viability:
- The scheme aims to reduce the cost of battery storage systems and enhance their economic viability.
- The Levelized Cost of Storage (LCoS) target is set at a range of Rs 5.50-6.60 per kilowatt-hour (kWh), which will make stored renewable energy a cost-effective solution for managing peak power demand nationwide.
- 85% of the BESS projects under this scheme will be allocated to power distribution companies (discoms).
- This allocation will facilitate the seamless integration of renewable energy into the electricity grid while minimizing wastage and optimizing transmission network utilization.
- Developers for BESS projects will be chosen through a competitive bidding process, open to both public and private sector entities.
- This approach encourages healthy competition, fosters the growth of a robust BESS ecosystem, attracts significant investments, and creates opportunities for associated industries.