Viability Gap Funding Scheme for Grid-Scale Energy Storage Systems Latest News
The Union Cabinet has approved the Viability Gap Funding (VGF) Scheme for Development of Grid-Scale Energy Storage Systems, with a total financial support of Rs.14,500 crore.
About Viability Gap Funding Scheme for Grid-Scale Energy Storage Systems
- The scheme aims to support the development of 92 GWh of energy storage capacity across the country.
- Objective: To strengthen India’s domestic energy storage manufacturing ecosystem through demand-side financial support and reduce dependence on imported components.
- The scheme envisages the development of
- 60 GWh of Hydro Pumped Storage Plant (PSP)
- 30 GWh of Battery Energy Storage System (BESS)
- 2 GWh of capacity through alternative energy storage technologies
- Time Period: FY 2026-27 to FY 2030-31.
Features of Viability Gap Funding Scheme for Grid-Scale Energy Storage Systems
- Allocation Method:
-
- 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 Hydro PSP projects.
- Projects based on alternative energy storage technologies will be implemented by public and private sector entities.
- Domestic Content Requirement (DCR): To promote indigenous manufacturing, BESS projects will be subject to a minimum Domestic Content Requirement (DCR) of 40%.
Significance Viability Gap Funding Scheme for Grid-Scale Energy Storage Systems
- It will strengthen India’s power sector infrastructure, facilitating large-scale integration of renewable energy and ensuring reliable, affordable and round-the-clock power supply.
- It will also provide an impetus to domestic manufacturing of battery energy storage systems, reduce import dependence and enhance the country’s long-term energy security.
- The VGF support will help improve the financial viability of these projects.
Source: PIB
Last updated on Nov, 2026
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