Battery Energy Storage Systems

About Battery Energy Storage Systems

• This scheme envisages the 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.
• For passing on the scheme to consumers of the Discoms, at least 85% of the power from VGF-funded BESS projects shall be first offered to Discoms before making it available for others.
• The selection of BESS developers for VGF grants will be carried out through a 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 minimise wastage while optimising the utilisation 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.

Q1) What is Renewable energy?

Renewable energy is energy derived from natural sources that are replenished at a higher rate than they are consumed. Sunlight and wind, for example, are such sources that are constantly being replenished. Renewable energy sources are plentiful and all around us.

Source: At least 85% of power from VGF-funded Battery Energy Storage Systems projects to be first offered to Discoms before making it available for others: Union Power and New & Renewable Energy Minister