Government launches BESS scheme for a sustainable energy future
In a significant development, the Union Cabinet, under the leadership of the Prime Minister, has approved the Viability Gap Funding (VGF) Scheme for the advancement of Battery Energy Storage Systems (BESS). This momentous decision sets the stage for the development of 4,000 MWh of BESS projects by 2030-31, with financial support of up to 40% of the capital cost, provided as budgetary support in the form of Viability Gap Funding (VGF). This move marks a pivotal step in the government’s ongoing efforts to promote environmental sustainability and aims to reduce the cost of battery storage systems, thereby enhancing their feasibility.
The primary objective of this scheme is to harness the untapped potential of renewable energy sources such as solar and wind power. Its goal is to ensure clean, reliable, and affordable electricity for all citizens. The BESS Scheme, with an initial budget of Rs. 9,400 crore, including a budgetary allocation of Rs. 3,760 crore, reaffirms the government’s commitment to sustainable energy solutions. By providing VGF support, the scheme aspires to achieve a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50 to Rs. 6.60 per kilowatt-hour (kWh), making stored renewable energy a viable option for managing peak power demand nationwide. The disbursement of VGF will be done in five phases, corresponding to the various stages of BESS project implementation.
To ensure the scheme’s benefits reach consumers, a minimum of 85% of the BESS project capacity will be allocated to Distribution Companies (Discoms). This strategic move not only facilitates the integration of renewable energy into the electricity grid but also minimizes energy wastage while optimizing the use of transmission networks. Consequently, this will alleviate the need for costly infrastructure upgrades.
The selection of BESS developers for VGF grants will be carried out through a transparent competitive bidding process, promoting equal opportunities for both public and private sector entities. This approach encourages healthy competition and fosters the growth of a robust BESS ecosystem, attracting substantial investments and creating opportunities for associated industries.
The Government of India remains unwavering in its commitment to promote clean and sustainable energy solutions. The BESS Scheme is a significant stride towards realizing this vision. By harnessing renewable energy and encouraging the adoption of battery storage, the government aims to create a greener and brighter future for all citizens.
