India’s ₹5,400 Crore Battery Storage Push Powering the Future of Renewable Energy : In a landmark move to strengthen India’s renewable energy ambitions, the government has unveiled a ₹5,400 crore ($650 million approx.) funding package to rapidly boost the country’s battery energy storage systems (BESS). This scheme aims to add 30 gigawatt-hours (GWh) of storage capacity, a critical step toward achieving uninterrupted renewable power supply as India aggressively expands its solar and wind energy infrastructure.
Let’s break down what this means for India’s energy future, why battery storage is so crucial, and how this scheme could shape global energy markets.
Why Battery Energy Storage Is Critical for India
India has set one of the most ambitious renewable energy targets in the world: 393 gigawatts (GW) of renewable capacity by 2030 — with 293 GW coming from solar and 100 GW from wind. However, renewable energy sources like solar and wind are inherently intermittent — they don’t produce power when the sun isn’t shining or the wind isn’t blowing.
That’s where Battery Energy Storage Systems (BESS) come in. BESS allows surplus renewable energy generated during off-peak hours to be stored and then discharged when demand spikes — typically during non-solar hours in the evening. In simple terms, BESS acts like a giant power bank for the national grid.
Without adequate storage, large-scale renewable integration can strain the grid, leading to blackouts or underutilized power generation. According to the Central Electricity Authority (CEA), India will require 37 GWh of BESS capacity by 2027 and a staggering 236 GWh by 2031-32 to maintain grid stability and ensure 24/7 power supply.
Key Highlights of the ₹5,400 Crore Funding Scheme
Union Power Minister Manohar Lal Khattar announced the scheme on June 10, 2025. Here’s a snapshot of its major components:
- Funding Size: ₹5,400 crore allocated as Viability Gap Funding (VGF).
- New Capacity: 30 GWh of new BESS capacity.
- Investment Mobilization: Expected to attract private investments worth ₹33,000 crore.
- State Allocation: 25 GWh reserved for 15 states; 5 GWh allocated to NTPC Ltd, India’s largest power utility.
- Tender Timeline: The first round of tenders to be issued within 3 months.
This initiative builds upon the earlier ₹3,700 crore scheme under which 13.2 GWh of BESS capacity is already under development, raising India’s projected storage capacity to 43.2 GWh by 2027-28.
What Is Viability Gap Funding (VGF)?
For many investors, large-scale energy storage projects may not seem financially viable due to high upfront costs and uncertain revenue streams. Viability Gap Funding (VGF) helps bridge this gap by offering government grants that make these projects economically attractive, reducing risk for private developers.
In India’s case, this ₹5,400 crore VGF will significantly lower the cost of setting up battery storage projects, speeding up their deployment across the country.
Faster Execution Timelines
Under the terms of the new scheme:
- Projects must be commissioned within 18 months from the date of signing either the Battery Energy Storage Purchase Agreement (BESPA) or Power Purchase Agreement (PPA).
- Each BESS project should preferably have a two-hour discharge capacity and operate at an average of 1.5 charge-discharge cycles per day.
This fast-tracked timeline emphasizes the urgency of integrating storage to balance renewable generation with rising demand.
Boosting Developer Confidence: Transmission Charge Waivers
In another major incentive, the government has waived 100% of Inter-State Transmission System (ISTS) charges for BESS projects that are either co-located with renewable projects or commissioned by June 30, 2028.
Additional Benefits:
- Similar waivers have been extended to pumped hydro storage projects (PHS) commissioned by the same deadline.
- This move reduces overall project costs significantly, offering financial certainty to developers.
Quick Note on Pumped Hydro Storage:
PHS works like a natural battery, where water is pumped to a higher reservoir when power demand is low and released to generate electricity when demand peaks. India sees this as a complementary technology alongside battery storage.
The Transmission Challenge: Plugging India’s Green Power Bottleneck
While India’s renewable generation capacity is booming, transmission remains a key bottleneck. Many solar and wind projects are stuck due to delays in building transmission lines needed to evacuate power to consumption centers.
To address this, India has announced:
- A ₹53,000 crore investment in Ultra High Voltage Alternating Current (UHV AC) transmission systems.
- Development of nine 1100 kV transmission lines and ten new substations by 2034.
- New testing infrastructure under development by the Central Power Research Institute to ensure system reliability.
Resolving Land Acquisition Delays with New Compensation Rules
One of the biggest obstacles for transmission projects is land acquisition, often causing long legal disputes and delays. Recognizing this, the central government revised compensation norms in March 2025:
| Component | Earlier Compensation | New Compensation |
|---|---|---|
| Tower Area | 85% of land value | 200% of land value |
| Right of Way Corridor | 15% of land value | 30% of land value |
States like Haryana and Delhi have already adopted these updated guidelines, paving the way for faster project approvals.
Global Implications: India’s Leadership in Energy Storage
India’s aggressive push into battery storage isn’t just about domestic energy security — it’s positioning the country as a global leader in clean technology manufacturing and innovation.
Some key benefits of this policy shift:
- Job Creation: BESS and transmission projects will create thousands of jobs in engineering, manufacturing, installation, and maintenance.
- Domestic Manufacturing Boost: India’s Production Linked Incentive (PLI) schemes for advanced chemistry cells (ACC) complement the storage push.
- Technology Leadership: India can emerge as a major hub for exporting affordable energy storage solutions to emerging markets in Asia and Africa.
Fresh Insights: Why This Move Matters Right Now
Here are a few additional perspectives to consider:
- Energy Independence: Reducing dependence on fossil fuels helps improve national energy security, especially amid volatile global oil and gas prices.
- Climate Targets: BESS will play a critical role in helping India achieve its COP26 commitment to generate 50% of its power from non-fossil sources by 2030.
- Private Sector Opportunities: With clear policies and financial incentives, private players — from startups to conglomerates — have a chance to enter the high-growth battery storage market.
Conclusion: A Pivotal Step Toward a Greener, More Reliable Energy Future
India’s ₹5,400 crore investment into battery energy storage marks a game-changing moment in its clean energy journey. By addressing financial, technical, and regulatory challenges head-on, the government is laying the foundation for a grid that can handle massive amounts of renewable energy while keeping power stable and affordable.
As the world watches, India’s bold moves in energy storage may very well become a blueprint for emerging economies tackling the renewable revolution.
Frequently Asked Questions (FAQs)
Q1: Why does India need such massive battery storage capacity?
A: To ensure continuous power supply despite the intermittent nature of solar and wind energy, and to meet rising power demand during peak hours.
Q2: How does Viability Gap Funding help?
A: It reduces the financial risk for private developers by covering part of the upfront costs, making large-scale storage projects financially viable.
Q3: What is unique about pumped hydro storage?
A: It’s like a giant water-powered battery, using gravity to store and release energy, and works alongside BESS for grid stability.
Q4: How will transmission delays be addressed?
A: Through new compensation policies and significant investments in advanced transmission infrastructure.
