India Approves Rs 14,500 Crore Scheme to Develop 92 GWh Energy Storage Capacity

The Union Cabinet on Wednesday approved a Rs 14,500 crore viability gap funding (VGF) scheme to develop 92 gigawatt-hours (GWh) of grid-scale energy storage capacity, equivalent to 170% of India’s existing capacity, in a major push to attract Rs 97,600 crore investment and support round-the-clock renewable power supply. The scheme, spanning FY27 to FY31, will support nearly 22% of the country’s projected energy storage requirement of 411.4 GWh by FY32. India currently has approximately 54 GWh of grid-scale storage capacity. The approval comes as the government seeks to address one of the biggest challenges in expanding renewable energy : storing surplus electricity generated during the day and supplying it when solar and wind generation declines. Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the scheme would be implemented in collaboration with state governments to ensure storage capacity is distributed across the country. Of the proposed 92 GWh, pumped hydro storage projects will account for 60 GWh, followed by battery energy storage systems (BESS) at 30 GWh. Another 2 GWh will be developed through emerging storage technologies. “We will implement this scheme in collaboration with state governments, ensuring that it is distributed across the country,” Vaishnaw said. According to the Central Electricity Authority’s National Electricity Plan, India’s energy storage requirement is projected to reach 336.4 GWh by FY30 and 411.4 GWh by FY32. The FY32 requirement includes 236.22 GWh of battery storage and 175.18 GWh of pumped hydro capacity. The financial assistance will be available for projects yet to be commissioned, with capacity allocated through tariff-based competitive bidding. Public and private electricity distribution companies will be eligible for support for battery and pumped hydro projects, while alternative storage technologies can be developed by public and private sector entities. In a push for domestic manufacturing , battery storage projects under the scheme will have to meet a minimum domestic content requirement of 40%, aimed at reducing import dependence and supporting indigenous equipment manufacturers. The government said, “The requirement will encourage domestic manufacturing, create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing.” The latest approval expands the government’s storage support beyond batteries to include pumped hydro and alternative technologies. In September 2023, the Cabinet approved Rs 3,760 crore in budgetary support for battery storage, initially targeting 4 GWh, subsequently expanded to approximately 13.85 GWh as battery prices declined. In June 2025, the Power Ministry extended VGF support to another 30 GWh of battery capacity, backed by Rs 5,400 crore from the Power System Development Fund. The new scheme is also expected to improve the utilisation of renewable electricity and transmission infrastructure, reducing dependence on conventional generation for balancing power supply. “With the sharp rise in pace of RE generation capacity addition, especially over the last two years, scaling up energy storage has become an immediate priority for the Indian power system. The focus on pumped hydro, in addition to BESS and alternative technologies, is the key highlight of the new VGF Scheme,” Anujesh Dwivedi, Partner, Deloitte India, said.