The Ministry of Power (MoP) has issued the second tranche of the viability gap funding (VGF) scheme to support the development of 30 GWh of battery energy storage system (BESS) capacity in India. The VGF amount has been set at Rs 1.8 million per MWh, sourced from the power system development fund, with a total financial outlay of Rs 54 billion. Of the total allocation, 25 GWh of capacity has been distributed across 15 states, including Rajasthan, Gujarat, Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Madhya Pradesh, Telangana, Uttar Pradesh, Haryana, Kerala, Punjab, Chhattisgarh, Odisha, and Uttarakhand. NTPC Limited has been assigned the remaining 5 GWh to utilise its existing thermal and transmission infrastructure.
Eligible states and NTPC Limited are required to submit their project proposals to the national load despatch centre within 30 days date of issuance of the VGF scheme guidelines, and must commission projects within 18 months from the signing of the battery energy storage purchase agreement (BESPA) or power purchase agreement (PPA). Detailed implementation plans must also be submitted to the Central Electricity Authority within 60 days from the date of issuance of the VGF scheme guidelines, for screening and approval. These must include details such as implementing agencies, project locations, and proposed capacities. Approved proposals will be eligible to receive the VGF, which will be disbursed in three stages: 20 per cent at financial closure upon submission of a bank guarantee, 50 per cent at commercial operation date (COD), and the final 30 per cent after one year of successful operation.
The preferred BESS configuration is a two-hour discharge with an average of 1.5 cycles per day, though developers may adjust this based on project needs. Projects will be awarded through tariff-based competitive bidding, on a build-own-operate or build-own-operate-transfer basis, typically for 12 to 15 years. Tariffs may be quoted in Rs per MW per month or in Rs per kWh. Developers are required to sign BESPA or PPA contracts within nine months from the date of issuance of the VGF scheme guidelines. Projects may be connected to intra- or inter-state transmission systems depending on feasibility. Each implementing agency is responsible for securing land and grid connectivity. Prior to VGF disbursement, a bank guarantee equivalent to the sanctioned VGF must be provided and may be encashed in case of non-compliance. Guarantees covering VGF disbursed up to COD may be released within one year of project commissioning.
