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Battery Energy Storage Systems (BESS) Scheme


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).


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.

April 2024