India clears ₹14,500 cr grid storage scheme

India’s Union Cabinet has cleared a ₹14,500 crore viability gap funding (VGF) scheme to support the development of 92 GWh of grid-scale energy storage capacity by 2030-31. The programme, scheduled to provide financial support from FY27 to FY31, targets projects that have not yet been commissioned and is positioned as a major step in strengthening the country’s power infrastructure.

The approved capacity is expected to add new storage equal to 170% of India’s existing grid-scale energy storage base. The initiative is also intended to support the country’s projected requirement of 411 GWh of grid-scale energy storage by 2031-32.

The 92 GWh of planned capacity will consist of 60 GWh of hydro pumped storage plants, 30 GWh of battery energy storage systems (BESS) and 2 GWh based on alternative energy storage technologies. Hydro pumped storage will use surplus electricity to pump water to higher reservoirs and generate power during peak demand when water is released downhill through turbines.

Projects under the scheme are expected to draw total investment of about ₹97,600 crore. The VGF component is designed to improve project viability and accelerate rollout of large-scale storage infrastructure across the country.

Financial support under the VGF scheme will be provided over five financial years from 2026-27 to 2030-31. Capacity will be allocated through a tariff-based competitive bidding process, aiming to ensure cost-efficient selection of projects.

Public and private sector electricity distribution companies will be eligible for VGF support for battery energy storage and hydro pumped storage projects. Projects based on alternative storage technologies can be implemented by both public and private sector entities, broadening the range of potential developers.

Battery energy storage projects backed by the scheme must comply with a minimum Domestic Content Requirement of 40%. This condition is aimed at encouraging local manufacturing, reducing import dependence and complementing existing supply-side incentives for battery production.

The government expects the scheme to strengthen India’s domestic energy storage ecosystem while supporting broader policy visions such as Atmanirbhar Bharat and Viksit Bharat. By aligning funding support with manufacturing rules, the programme links infrastructure build-out with industrial development goals.

The new scheme is expected to facilitate greater integration of renewable energy into the power system by addressing the variability of solar and wind generation. Large-scale storage is intended to improve grid stability and reduce reliance on conventional power generation for balancing supply and demand.

By supporting grid-scale storage projects nationwide, the initiative is also expected to enhance the availability of affordable, round-the-clock electricity. It builds on India’s wider renewable energy ambitions.