Cabinet approves Rs 14,500 crore support for 92 GWh grid-scale storage

The Union Cabinet has approved Rs 14,500 crore in financial support for grid-scale energy storage, according to Saur Energy. The initiative aims to facilitate the deployment of a total target capacity of 92 GWh.

Capacity Targets and Timeline

The approved scheme spans from fiscal year 2026-27 through 2030-31. The 92 GWh total capacity is divided into three distinct technology categories. Battery Energy Storage Systems (BESS) account for 30 GWh of the target. Pumped Storage Projects (PSPs) represent the largest share at 60 GWh. The remaining 2 GWh is allocated to emerging energy storage technologies.

Investment and Market Context

Developers are projected to invest a total of ₹97,600 crore to build the approved storage capacity. This new infrastructure represents a 170% increase over India’s present grid-scale energy storage capacity. Authorities estimate that the total grid-scale energy storage requirement will reach 411 GWh by 2031-32, indicating that the current scheme covers a portion of the long-term demand.

Bidding Rules and Eligibility

• Battery Energy Storage Systems (BESS) initiatives are required to satisfy a minimum 40% Domestic Content Requirement (DCR).
• Both public and private sector electricity distribution companies can receive VGF assistance for BESS and Hydro Pumped Storage Projects (PSP).
• Entities in both the public and private sectors are qualified for VGF support when utilizing alternative storage technologies.

Strategic Objectives

The approved scheme targets three core outcomes: accelerating renewable energy integration, enhancing grid stability, and ensuring round-the-clock power supply. A specific focus on battery components aims to reduce India’s import dependence for these critical inputs.

Funding Mechanism and Allocation Process

The financial support is structured as a Viability Gap Funding (VGF) scheme designed to improve project financial viability. Capacity allocation will occur through a tariff-based competitive bidding process. The government aims to complement existing supply-side incentives for battery manufacturing with this demand-side financial support. This approach is intended to create opportunities for Indian industry and strengthen the domestic energy storage manufacturing ecosystem. The scheme specifically targets the development of capacity that is yet to be commissioned, addressing the variability of renewable energy generation. By facilitating greater utilisation of renewable energy, the initiative seeks to reduce dependence on conventional generation for grid balancing. The VGF support is expected to accelerate the deployment of large-scale energy storage infrastructure across the country. This mechanism ensures that both public and private sector entities can participate in the development of these critical power sector assets.

What to watch

Modules under List-I standards are mandated for covered projects as on 15 October 2026. Requirements for List-II cells become active on 1 June 2026, with a window for net-metering and open-access projects commissioned by 31 December 2026. Regulations for List-III ingots and wafers commence application on 1 June 2028.