Centre Clears ₹5,400 Crore for 30 GWh Battery Storage Projects

The Indian government has announced a new viability gap funding (VGF) scheme worth ₹5,400 crore to support the development of 30 gigawatt-hours (GWh) of battery energy storage systems (BESS). Reports suggest that this is aimed at improving storage capacity to handle the growing share of renewable energy in the power grid. This ₹5,400 Crore scheme aims to attract ₹33,000 Crore in investment, meeting the country's BESS requirement by 2028.

Scheme Details

The ₹5,400 crore funding will come from the Power System Development Fund. Out of the total capacity, 25 GWh will be distributed among 15 states, while 5 GWh has been allocated to NTPC Ltd. The government plans to float the first round of tenders for the scheme within the next 3 months.

This is in addition to an earlier ₹3,700 crore VGF scheme, under which 13.2 GWh of BESS projects are already underway. Combined, these initiatives are to help India reach 43.2 GWh of battery storage capacity by 2027-28.

Transmission Waiver 

Alongside the VGF announcement, the government has approved a 100% waiver on Inter-State Transmission System (ISTS) charges for BESS projects that are co-located with renewable energy plants and commissioned by June 30, 2028. A similar waiver has also been approved for pumped hydro storage projects.

Power Sector Expansion 

To address delays in power transmission infrastructure, the Centre has proposed a ₹53,000 crore investment for Ultra High Voltage Alternating Current (UHVAC) systems. This includes the development of nine 1100 kV transmission lines and ten substations by 2034.

In March 2025, the government revised compensation norms to address right-of-way issues in transmission projects. Compensation for tower areas has been raised from 85% to 200% of land value, and corridor compensation from 15% to 30%.

Storage 

The Central Electricity Authority estimates that India will need 236 GWh of BESS capacity by 2031-32. Peak power demand has already touched 241 GW this year and is projected to hit 270 GW during the summer, as per the reports.

Read More: Government’s ₹1 Trillion Innovation Fund to Boost Battery, Clean Energy, and EV Sectors in India!

Conclusion

The new VGF scheme, along with related measures, is intended to scale up India’s battery storage infrastructure and support ongoing renewable energy targets.

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