IndiaPosted at: Nov 4 2026 4:15PM


Cabinet clears Rs 14,500-crore scheme to add 92 GWh of energy storage capacity

New Delhi, Nov 4 (UNI) The union Cabinet, on Wednesday, approved a Rs 14,500-crore Viability Gap Funding (VGF) Scheme to develop 92 GWh of grid-scale energy storage capacity across the country, in a major push to strengthen India's power infrastructure, facilitate greater integration of renewable energy and ensure a reliable and affordable electricity supply round the clock.
Announcing the decision after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said the scheme would be implemented over five financial years, from 2026-27 to 2030-31, and would provide financial assistance to projects that are yet to be commissioned. The proposed capacity addition would be equivalent to around 170 per cent of India's existing grid-scale energy storage capacity and contribute towards meeting the country's projected requirement of 411 GWh by 2031-32.
Under the scheme, 60 GWh of capacity will be developed through Hydro Pumped Storage Projects (PSPs), 30 GWh through Battery Energy Storage Systems (BESS) and the remaining 2 GWh through emerging alternative energy storage technologies. The projects are expected to attract an overall investment of approximately Rs 97,600 crore, with government support aimed at improving their financial viability and speeding up implementation.
The initiative addresses a critical challenge in India's rapidly expanding renewable energy sector: the intermittent nature of solar and wind power generation. Electricity generated from these sources is not always available when demand is at its peak, making large-scale storage essential for balancing supply and consumption. Storage facilities can absorb surplus electricity during periods of high generation and release it when demand rises or renewable energy production declines.
The government expects the proposed capacity addition to enable more effective utilisation of renewable energy, improve grid stability and reduce dependence on conventional power generation for balancing fluctuations in electricity supply. The initiative is also intended to enhance the flexibility and resilience of the national electricity network as demand for power continues to increase.
Financial assistance under the scheme will be allocated through a tariff-based competitive bidding process. Public and private sector electricity distribution companies will be eligible for VGF support for battery storage and hydro pumped storage projects, while projects based on alternative storage technologies will be implemented by both public and private sector entities.
A key feature of the programme is its emphasis on domestic manufacturing. Battery Energy Storage System projects will be required to meet a minimum Domestic Content Requirement (DCR) of 40 per cent, a provision intended to promote indigenous manufacturing of battery components and reduce dependence on imported equipment and materials.
The domestic content requirement is expected to create new opportunities for Indian manufacturers, strengthen the country's battery manufacturing ecosystem and complement existing government incentives for domestic production. It also forms part of the broader effort to develop indigenous capabilities in strategic energy technologies and strengthen long-term energy security.
Large-scale energy storage projects involve substantial upfront investment and often face financial viability challenges despite their importance to the power sector. Through viability gap funding, the government intends to bridge part of this financial gap, make projects more attractive to investors and encourage wider participation by public and private sector developers.
With government support of Rs 14,500 crore expected to leverage an estimated Rs 97,600 crore in total investment, the scheme is designed to significantly expand India's capacity to store electricity and deploy it according to demand. Energy storage is expected to become increasingly important in managing peak loads, integrating variable renewable sources and ensuring uninterrupted power availability as the country moves towards a cleaner electricity system.
The government has positioned the initiative as an important step towards achieving the twin objectives of Atmanirbhar Bharat and Viksit Bharat, while strengthening energy security, encouraging domestic manufacturing and making electricity supply more reliable and affordable.
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