The Union Cabinet has approved a ₹14,500 crore Viability Gap Funding (VGF) scheme for the development of grid-scale energy storage systems for the period 2026-27 to 2030-31, the government announced on Wednesday.
According to the government, the scheme is aimed at supporting the development of 92 GWh of fresh, yet-to-be-commissioned, energy storage capacity across the country.
“The scheme will support creation of new capacities equivalent to 170% of the present-day grid scale energy storage system capacity in the country and help meet the required grid scale ESS capacity of 411 GWh by 2031-32,” the government said in a release.
The scheme is designed to provide for the development of 60 GWh of hydro pumped storage plant (PSP) capacity, 30 GWh of battery energy storage system (BESS) capacity and 2 GWh of capacity through alternative energy storage technologies, with a total estimated investment of ₹97,600 crore.
“The VGF support will help improve the financial viability of these projects and accelerate the deployment of large-scale energy storage infrastructure in the country,” the government said, adding that the scheme will also provide an impetus to domestic manufacturing of battery energy storage systems.
As per the government’s release, energy storage capacity will be allocated through a tariff-based competitive bidding process with both public and private sector electricity distribution companies eligible for VGF support for BESS and hydro PSP projects.
Projects based on alternative energy storage technologies, too, will be implemented by public and private sector entities.
“To promote indigenous manufacturing, BESS projects will be subject to a minimum Domestic Content Requirement (DCR) of 40%,” the government added. “The requirement will encourage domestic manufacturing, create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing.”
Published – November 04, 2026 05:24 pm IST
