- Approves Rs 3,760 cr viability gap fund
- The fund will be released in five tranches till 2030-31 and help in creation of 4,000 MW hours storage
- Electricity demand changes as per weather and the storage system will enable storing energy for usage at night or when generation is not possible
- India aims to meet its 50 per cent of energy requirements through renewable energy and non-fossil energy sources
IndiGlobal Bureau
The Information and Broadcasting Minister Anurag Thakur on Wednesday announced the Government’s approval of Rs 3,760 crore viability gap funding for setting up battery energy storage system in the country. He added that the entire Rs 3,760 crore viability gap funding will be borne by the central government and the fund will be released in five tranches till 2030-31 and help in creation of 4,000 MW hours storage.
The VGF would be disbursed in five tranches linked with various stages of implementation of BESS projects. “We have set the goal of meeting 50% of our energy requirement from renewable or non-fossil energy sources by 2030. We are committed to this. We have also met other targets before time. Today, a big decision has been taken in that direction to facilitate VGF for setting up BESS. For this, ₹3,760 crore will be spent. This a 100% central grant,” the minister said, adding the move may attract investments of about ₹9,500 crore.
It may be noted that the plan for a 4,000 MWh VGF for battery storage was first announced by finance minister Nirmala Sitharaman earlier this year during the announcement of the Union budget.
An official statement on Thursday said that to ensure that the scheme’s benefits reach the consumers and they get the power from storage projects developed through the incentive scheme, a minimum of 85% of the BESS project capacity will be made available to distribution companies (discoms).
The outcomes are huge as the integration of renewable energy into the grid would automatically reduce the wastage and ensure optimum utilization of transmission networks. Also, it would result in reduction of costly infrastructure upgrades.
BESS developers will be selected for VGF grants through competitive bidding
This approach, according to the government, will foster healthy competition and encourage the growth of a robust ecosystem for BESS, attracting significant investments and generating opportunities for associated industries”
Grid-scale battery storage systems are critical to energy transition since renewable power generation fluctuates depending on sunlight and wind conditions. Storage systems store energy for release at night or when generation is not possible. However, such systems are yet to pick up in India, given the high expenditure involved.
The government has been focusing on policies for the renewable sector amid the target to achieve 500 gigawatts (GW) of installed renewable energy capacity. Last year, the power ministry issued guidelines for the procurement and utilization of BESS as part of generation, transmission and distribution assets, along with ancillary services. Further, it also notified the Energy Storage Obligations (ESO) of 4% of the total consumption of electricity by FY30 for power discoms in line with the renewable purchase obligation.
The power ministry is also working on a production-linked incentive (PLI) scheme for battery storage. There is also a move to reduce the goods and services tax (GST) on grid-scale battery storage to 5%. Currently, the GST on lithium-ion batteries used for grid-scale power projects is 18%, and that on non-lithium-ion batteries is 28%.
As of FY23, India had around 37MWh of BESS capacity, and according to the Central Electricity Authority, the requirement for battery storage will reach 236.22 gigawatt-hours by 2031-32.
Industrial Development Scheme for Himachal Pradesh and Uttarakhand
The cabinet also approved ₹1,164.53 crore for the Industrial Development Scheme (IDS), 2017, for Himachal Pradesh and Uttarakhand. Under the scheme, all eligible new industrial units and existing industrial units in the states on their “substantial expansion” in the manufacturing and service sector will be provided with a central capital investment incentive for access to credit at 30% of the investment in plant and machinery with an upper limit of ₹5 crore.
The industrial units will be eligible for reimbursement of 100% insurance premium on insurance of building and plant and machinery for a maximum period of five years from the date of commencement of commercial production and operation, said a statement.