India finalizes mechanism for operationalizing VGF for the deployment of battery energy storage

The Union Minister of Power, New & Renewable Energy, R. K. Singh, on Thursday (Feb. 22) held a meeting to finalize the structure for operationalizing the Viability Gap Funding (VGF) for the development of 4,000MWh Battery Energy Storage Systems (BESS) in the country.

The meeting attended by senior officials from the Ministry of Power, Ministry of New & Renewable Energy, Central Electricity Authority, Solar Energy Corporation of India, Grid India, and NTPC Vidyut Vyapar Nigam Ltd. (NVVN) discussed the need for adequate BESS capacity to provide Round-the-Clock renewable energy. 

Singh acknowledged that the price of BESS has come down in recent years and the government will encourage setting up BESS capacity to meet the fast-growing needs of power demand and energy transition.

The role of government is to create enabling structures so that investment can come in, Singh said and stressed the new system to fructify in a manner that provides energy at those times of the day and year when the nation needs it the most.

The officials discussed the need for BESS to deliver electricity during period of peak demand at the same time help with grid stabilization. The various models for procuring the BESS, such as those based on energy and capacity contracts, along with the pros and cons of these models and the challenges associated with their implementation were also discussed at the meeting.