New Delhi: The government has issued Letters of Award (LoAs) for 12.7 GWh of battery storage capacity under its budgetary-support Viability Gap Funding (VGF) scheme, of which purchase agreements have been executed and financial closure achieved for 6.54 GWh, while 0.5 GWh has been commissioned and Rs 168.04 crore of VGF disbursed, Minister of State for Power Shripad Naik told the Rajya Sabha in a written reply on Monday.
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The figures cover one of two VGF schemes the Ministry of Power is administering for a combined 43.8 GWh of Battery Energy Storage Systems (BESS), Naik said.
The budgetary-support scheme was approved for 4 GWh with an outlay of Rs 3,760 crore, and the supported capacity was later raised to 13.8 GWh within the same outlay "owing to the decline in BESS prices," Naik said.
The second scheme, initiated through an order dated June 9, 2025, provides for 30 GWh of BESS with Rs 5,400 crore of support from the Power System Development Fund (PSDF). Of this, 25 GWh has been allocated to 15 states for their storage requirements and 5 GWh to NTPC Ltd to support demand during non-solar hours and, "optimise the utilisation of existing thermal and transmission infrastructure," said Naik in the written response.
Under this scheme, LoAs have been issued for 22.43 GWh and Battery Energy Storage Purchase Agreements (BESPAs) executed for 19.65 GWh, with financial closure achieved for 5 GWh and a sanction issued to disburse Rs 180 crore of VGF, Naik said.
Across the two schemes, LoAs have been issued for about 35.1 GWh and financial closure reached for 11.5 GWh, against 0.5 GWh commissioned so far.
Naik said BESS "can play a vital role in meeting peak electricity demand and ensuring grid reliability," by storing electricity during periods of low demand or high renewable generation and supplying it at peak times. He said storage "enables time-shifting of energy, enhances grid flexibility," and "reduces dependence on expensive peak power." Generating companies can use BESS to shift off-peak energy to peak periods, while grid operators and distribution licensees can use it for peak-load and congestion management, he added.
The reply also listed measures the government said it has taken to promote storage. The Electricity Rules were amended in December 2022 to recognise energy storage systems as an integral part of the power system, and storage was included in the Finance Ministry's Harmonised Master List of Infrastructure in October 2022 to ease access to financing. A National Framework for Promotion of Energy Storage Systems was issued in September 2023.
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On market and demand-side measures, the reply said inter-state transmission system (ISTS) charges have been waived for co-located BESS projects commissioned up to June 2028, and that tariff-based competitive bidding guidelines for procurement of storage by distribution licensees were notified in March 2022. On manufacturing, it cited the Ministry of Heavy Industries' Rs 18,100 crore production-linked incentive scheme for 50 GWh of advanced chemistry cell capacity, of which 10 GWh is earmarked for grid-scale stationary storage. A February 2025 advisory from the Central Electricity Authority recommended co-locating storage of at least 10 percent of installed solar capacity for a minimum of two hours to improve the dispatchability of solar power.