Cabinet approves Rs 14,500 crore scheme to boost grid-scale energy storage systems

The Union Cabinet has approved Rs 14,500 crore in viability gap funding for 92 GWh of grid-scale energy storage. The scheme seeks to improve renewable integration, domestic manufacturing and long-term energy security.The scheme aims to boost grid-scale energy storage capacity through financial support of Rs 14,500 crore over five years.New Delhi,Nov 6, 2026 00:49 ISTThe Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Rs 14,500 crore viability gap funding (VGF) scheme to develop 92 GWh of grid-scale energy storage capacity across the country by 2031.The scheme will run from financial year 2026-27 to 2030-31 and support energy storage projects that are yet to be commissioned. The proposed capacity is equivalent to 170 per cent of India's existing grid-scale energy storage capacity.The initiative is aimed at helping India meet its projected requirement of 411 GWh of grid-scale energy storage capacity by 2031-32. It is also expected to improve the integration of renewable energy into the electricity grid and ensure a reliable and affordable round-the-clock power supply.WHAT WILL THE Rs 14,500 CRORE SCHEME FUND?The scheme envisages the development of three categories of energy storage capacity: 60 GWh: Hydro Pumped Storage Plants (PSPs)30 GWh: Battery Energy Storage Systems (BESS) 2 GWh: Alternative energy storage technologiesThe projects are expected to attract a total investment of Rs 97,600 crore. The government's viability gap funding will help improve their financial feasibility and speed up the development of large-scale storage infrastructure.Energy storage capacity 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 pumped hydro projects. Projects based on alternative storage technologies will be implemented by public and private sector entities.40% DOMESTIC CONTENT REQUIREMENT FOR BATTERY PROJECTSThe scheme also aims to strengthen India's domestic energy storage manufacturing ecosystem and reduce dependence on imported components.Battery Energy Storage System projects will have to meet a minimum Domestic Content Requirement (DCR) of 40%. The requirement is intended to encourage domestic manufacturing, create opportunities for Indian companies and complement existing incentives for battery manufacturing.HOW WILL THE SCHEME HELP INDIA'S RENEWABLE ENERGY SECTOR?Large-scale energy storage is essential for managing fluctuations in electricity generated from renewable sources such as solar and wind power.The proposed infrastructure will allow surplus electricity to be stored and supplied when generation falls or demand rises. This is expected to improve grid stability, increase the use of renewable energy and reduce dependence on conventional power generation for balancing electricity supply.The government said the scheme would strengthen India's power infrastructure, encourage domestic manufacturing and improve long-term energy security, in line with the objectives of Atmanirbhar Bharat and Viksit Bharat.- Ends