India planning ₹3,760 crore incentives for 4,000 MWh capacity BESS projects

India will offer ₹3,760 crore in incentives to companies for setting up battery storage projects of total 4,000 megawatt hours (MWh) capacity, Reuters reports, quoting unidentified government sources said. The plan had been announced in the Union Budget earlier this year, and the government expects ₹5,600 crore of private investment to accrue from the scheme.

The government will provide viability gap funding in the form of grants for three years for these projects, the sources said, meeting demands from industry associations such as industry associations such as the India Energy Storage Alliance (IESA) for project support. 

More than 29 GWh of energy storage system (ESS) projects have been announced in India, and authorities have tendered projects totaling as much as 5 GWh. Grid-scale battery energy storage systems, known as BESS, are used to overcome the cyclicality of energy generation from renewable sources. They store renewable energy during generation and release it at times of demand.

India aims to be a manufacturing hub for batteries, and corporate houses such as Tatas are setting up a gigafactory in Gujarat, while Amara Raja is developing one in Telangana and Reliance is eyeing multiple facilities to meet growing demand.

News reports indicate the Center is preparing production incentives worth as much as ₹15,000 crore to promote grid-scale BESS, and the power ministry expects the new production-linked incentives (PLI) scheme to be notified around December this year. The draft of the scheme could be released next month.