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Battery Energy Storage Systems (BESS) Scheme

Context:

Recently, the Union Cabinet, chaired by the Hon’ble Prime Minister of India, approved the Scheme for Viability Gap Funding (VGF) for the development of Battery Energy Storage Systems (BESS).

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. Battery storage
  2. About Battery Energy Storage Systems (BESS)

Battery storage

  • Battery storage, also known as battery energy storage systems (BESS), refers to devices designed to capture and store energy, typically generated from renewable sources such as solar and wind.
  • This stored energy can be released and utilized when there is a demand for power, helping to balance energy supply and demand more efficiently.

About Battery Energy Storage Systems (BESS):

  • Development Goals: The approved scheme targets the development of 4,000 MWh of Battery Energy Storage Systems (BESS) projects by the year 2030-31.
  • Funding: The government provides financial support for BESS projects, offering up to 40% of the capital cost in the form of Viability Gap Funding (VGF). This funding will be disbursed in five tranches linked to different project implementation stages.
  • Levelized Cost of Storage (LCoS): The scheme aims to achieve a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50-6.60 per kilowatt-hour (kWh) through VGF support. This cost-effectiveness makes stored renewable energy a viable option for managing peak power demand nationwide.
  • Distribution Companies (Discoms): To ensure consumer benefits, a minimum of 85% of BESS project capacity will be made available to Distribution Companies (Discoms).
  • Selection Process: The selection of BESS developers for VGF grants will be conducted through a transparent and competitive bidding process. This approach promotes fairness for both public and private sector entities.
  • Significance: The scheme has several significant advantages:
    • Enhancing the integration of renewable energy into the electricity grid.
    • Minimizing energy wastage while optimizing transmission network utilization.
    • Reducing the need for expensive infrastructure upgrades.
    • Encouraging competition and fostering a robust ecosystem for BESS, attracting investments and generating opportunities for associated industries.
    • Supporting clean, reliable, and affordable electricity for citizens by harnessing the potential of renewable energy sources like solar and wind power.

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