Cabinet Approves ₹14,500 Crore Grid Storage VGF
04.11.26 – By NewsIP Bureau – New Delhi –
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a ₹14,500 crore Viability Gap Funding (VGF) scheme to support 92 GWh of new grid-scale energy storage capacity. The scheme runs from FY 2026-27 to FY 2030-31 and is intended to help strengthen India’s electricity system as renewable power expands.Also Read: More NewsIP business coverage
The planned capacity comprises 60 GWh of Hydro Pumped Storage Plant projects, 30 GWh of Battery Energy Storage Systems (BESS) and 2 GWh using emerging storage technologies. The scheme’s stated target is capacity yet to be commissioned, and the government says it will support additions equivalent to 170% of the country’s present grid-scale storage capacity.Also Read: More NewsIP updates
The projects are expected to require total investment of ₹97,600 crore. VGF support is intended to improve project viability and accelerate deployment. The government has set a longer-term requirement of 411 GWh of grid-scale energy storage capacity by 2031-32.Also Read: More NewsIP policy coverage
Capacity will be allocated through tariff-based competitive bidding. Public- and private-sector electricity distribution companies will be eligible for VGF support for BESS and Hydro PSP projects. Projects using alternative storage technologies may be implemented by public- and private-sector entities, according to the announcement.Also Read: More NewsIP coverage
Domestic content requirement for battery projects
BESS projects supported under the scheme will be subject to a minimum Domestic Content Requirement of 40%. The measure is intended to encourage Indian manufacturing and reduce reliance on imported components. The announcement describes this demand-side support as complementing existing supply-side incentives for battery manufacturing.Also Read: More NewsIP updates
Energy storage can help manage differences between when renewable electricity is generated and when it is needed. The government says the scheme is intended to improve renewable integration, support grid stability and help provide reliable, affordable round-the-clock power. These are stated objectives; the announcement does not quantify the scheme’s expected effect on tariffs or emissions.Also Read: More NewsIP coverage
The combination of pumped storage, battery systems and emerging technologies is designed to expand the range of storage options available to the grid. The VGF is the scheme’s financial support mechanism; project awards and commissioning will depend on the competitive bidding and implementation process.Also Read: More NewsIP national coverage
The scheme links energy infrastructure investment with a domestic manufacturing requirement for BESS. Its stated goals include improving the flexibility of India’s power system, supporting greater use of renewable energy and advancing the government’s Atmanirbhar Bharat and Viksit Bharat objectives.Also Read: More NewsIP coverage
