Battery Energy Storage Systems (BESS) Scheme

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Recently, the Union Cabinet, chaired by the Hon'ble Prime Minister of India approved the Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS).

About Battery Energy Storage Systems (BESS)

  • The approved scheme envisages development of 4,000 MWh of BESS projects by 2030-31.
  • Funding:
    • Financial support of up to 40% of the capital cost as budgetary support in the form of Viability Gap Funding (VGF) is provided by the union government.
    • The VGF shall be disbursed in five tranches linked with the various stages of implementation of BESS projects.
  • By offering VGF support, the scheme targets achieving a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50-6.60 per kilowatt-hour (kWh), making stored renewable energy a viable option for managing peak power demand across the country.
  • To ensure that the benefits of the scheme reach the consumers, a minimum of 85% of the BESS project capacity will be made available to Distribution Companies (Discoms).
  • The selection of BESS developers for VGF grants will be carried out through   transparent competitive bidding process, promoting a level playing field for both public and private sector entities.
  • Significance:
    • This will not only enhance the integration of renewable energy into the electricity grid but also minimize wastage while optimizing the utilization of transmission networks.
    • This will reduce the need for costly infrastructure upgrades.
    • The competitive bidding process approach will foster healthy competition and encourage   the growth of a robust ecosystem for BESS, attracting significant investments and generating opportunities for associated industries.
    • This scheme is designed to harness the potential of renewable energy sources such as solar and wind power, the scheme aims to provide clean, reliable, and affordable electricity to the citizens.


What is battery storage?

  • Battery storage, or battery energy storage systems (BESS), are devices that enable energy from renewables, like solar and wind, to be stored and then released when the power is needed most.


Q1) What is  Renewable energy?

Renewable energy, often referred to as renewables, is energy derived from naturally occurring and replenishable sources. Unlike fossil fuels, which are finite and contribute to environmental issues like climate change, renewable energy sources are considered more sustainable and environmentally friendly.

Source: Cabinet approves the Scheme titled Viability Gap Funding for Development of Battery Energy Storage Systems (BESS)