Cost of battery-based energy storage, INR 10.18/kWh, expected to reduce with VGF and PLI Schemes

Currently, the cost of battery-based energy storage in India is INR 10.18/kWh, as discovered in a SECI auction for 500 MW/1000 MWh BESS. The government has launched viability gap funding and Production-Linked Incentive (PLI) schemes to make battery storage affordable.

December 13, 2023 Uma Gupta

image: Anesco

RK Singh, India’s minister for Power and New & Renewable Energy, shared that a SECI auction for the installation of a 500 MW/1000 MWh battery energy storage system (BESS) has yielded a capacity charge of minimum INR 10.83 lac/MW/month, or INR 10.18 ($0.12)/kWh.

The minister told that to make battery storage affordable, the government has approved a viability gap funding scheme for setting up 4 GWh of BESS. The Scheme provides VGF up to 40% of the capital cost for BESS, which will bring down the cost of electricity from BESS.

Further, the Ministry of Heavy Industries (MHI), in June 2021, launched a Production-Linked Incentive (PLI) scheme for the manufacturing of advanced chemistry cell (ACC) battery storage of 50 GWh capacity, which includes more than 10 GWh grid-scale battery storage. Out of 50 GWh capacity, 30 GWh capacity has already been allotted through a competitive bidding process. The PLI-ACC scheme has an outlay of INR 18,100 crore.

The minister said the PLI scheme would encourage investment in the domestic manufacturing of cells for grid-scale applications, reduce dependency on imports, and result in a reduction of the BESS cost in future.

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