India approves INR 145 billion for 92 GWh storage scheme

India’s Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the viability gap funding (VGF) scheme for the development of grid-scale energy storage systems, with total financial support of INR 145 billion for fiscal years 2026-27 to 2030-31.

The scheme aims to support the development of 92 GWh of energy storage capacity across the country. It will support new capacity equivalent to 170% of India’s current grid-scale energy storage capacity and help meet the projected requirement of 411 GWh by 2031-32.

The scheme envisages the development of 60 GWh of pumped storage hydropower (PSH) capacity, 30 GWh of battery energy storage system (BESS) capacity and 2 GWh of capacity through alternative energy storage technologies, with a total estimated investment of INR 976 billion. The VGF support is intended to improve the financial viability of these projects and accelerate the deployment of large-scale energy storage infrastructure in the country.

Energy storage capacity will be allocated through a tariff-based competitive bidding process. Public and private sector electricity distribution companies will be eligible for VGF support for BESS and pumped storage hydropower projects, while projects based on alternative energy storage technologies will be implemented by public and private sector entities.

A key objective of the scheme is to strengthen India’s domestic energy storage manufacturing ecosystem through demand-side financial support and reduce dependence on imported components. To promote domestic manufacturing, BESS projects will be subject to a minimum domestic content requirement (DCR) of 40%.

The government said the requirement will encourage domestic manufacturing, create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing. It said the scheme is intended to support a flexible electricity system by accelerating grid-scale storage deployment, increasing renewable energy utilization, addressing variability in renewable generation and reducing dependence on conventional generation to balance round-the-clock power supply.

From pv magazine India