Indian government has more than tripled the battery energy storage system (BESS) target to 13.2 GWh by FY 2027-28 under the viability gap funding (VGF) scheme. The capacity development will be supported within the VGF amount of INR 3,760 crore sanctioned for the 4 GWh capacity targeted earlier. The BESS target revision has been done in view of the decline in BESS prices in the recent past.
Under the VGF Scheme, up to 40% of the capital cost for BESS is provided by the central government. The VGF Scheme period is three years from 2023-24 to 2025-26. Projects falling under the scheme will receive approval during this period. The funds will be disbursed in five tranches: 10% on the financial closure of the project, 45% on the commissioning of the project and 15% year-wise up to three years from the commissioning of the project.
The power ministry has planned the development of 13.2 GWh BESS capacity under three components:
- Market component: First tranche with 1,000 MWh BESS capacity allocated to NTPC Vidyut Vyapar Nigam (NVVN) with VGF of INR 46 lakh/MWh (totalling INR 460 crore). Under Tranche II, a capacity of 1,200 MWh allocated to Solar Energy Corp. of India (SECI) with VGF support of INR 27 lakh/MWh (totalling INR 324 crore).
- State component: 6,000 MWh has been allocated to eight states, including Rajasthan, Tamil Nadu, Karnataka, Gujarat, Maharashtra, Telangana, Bihar and Kerala, providing VGF of INR 27 lakh/MWh (total VGF is INR 1,620 crore).
- CPSU component: 5,000 MWh has been allocated to NVVN, NHPC and SJVN with VGF support of INR 27 lakh/MWh (total VGF is INR 1,350 crore).
The ministry has directed all the States and implementing agencies to award all the contracts by June 2025. Thereafter, the project commissioning is expected to take about 18 to 24 months.
According to the power ministry, the selection of bidders for the development of 1,000 MWh BESS capacity under Tranche-I through Market Mechanism was completed in Oct. 2024. Battery energy storage purchase agreement (BESPA) was signed by NVVN in Dec. 2024. Under the State component, Letter of Award (LoA) has been issued for 2,500 MWh BESS capacity including 1,000 MWh in Gujarat, 500 MWh in Maharashtra and 1,000 MWh in Rajasthan.
Under VGF scheme, projects are awarded based on tariff-based competitive bidding guidelines issued by the Ministry of Power. In Dec. last year, Gujarat Urja Vikas Nigam Ltd’s standalone BESS tender for 500 MW/1,000 MWh with VGF discovered the lowest price of INR 2.26 lakh/MW/month. This was 4.6% less than INR 2.37 lakh/MW/month discovered in NVVN’s BESS tender for 500 MW/ 1,000 MWh with VGF support in October.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
1 comment
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.