India Accelerates Renewable Energy Integration with Enhanced Battery Storage Funding
The Indian government is making significant strides in modernizing its power sector and ensuring a reliable electricity supply by substantially expanding Viability Gap Funding (VGF) for Battery Energy Storage Systems (BESS). A recent announcement from the Press Information Bureau (PIB) on August 21, 2026, highlighted the ongoing implementation of a VGF scheme for 13.22 GWh of BESS capacity with a budgetary allocation of ₹3,760 crore, originally approved in September 2023. Additionally, a second VGF scheme, sanctioned in June 2025 by the Ministry of Power, supports the development of another 30 GWh BESS capacity with ₹5,400 crore from the Power System Development Fund (PSDF). These combined efforts underscore India's commitment to integrating intermittent renewable energy sources, like solar and wind, into the grid effectively.
Industry experts emphasize the critical need for rapid expansion of battery storage capabilities as India's renewable energy capacity continues to grow. This expansion is vital for balancing peak demand and addressing the intermittency associated with renewable generation. While the government's policy support is robust, there's a significant gap between the targeted storage capacity and the current domestic manufacturing capability for essential battery components, leading to a reliance on imports. Despite these challenges, the VGF schemes aim to make BESS projects commercially viable, with the goal of achieving a Levelized Cost of Storage (LCoS) between ₹5.50–6.60/kWh under the initial scheme. The initiative also mandates an increasing share of power procurement from storage assets by power distribution companies (discoms), rising from 1% to at least 4% by 2030, further cementing the role of BESS in India's energy future.
