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Government Amends VGF Guidelines to Boost Domestic Battery Storage Deployment

The Ministry of Power (MoP) has revised its operational guidelines for the Viability Gap Funding (VGF) scheme supporting Battery Energy Storage System (BESS) projects under the Power System Development Fund (PSDF). The Rs94 billion initiative aims to promote 4,000 MWh of BESS capacity by offering up to 40% financial support.

Key amendments include allowing BESS projects to connect to both Intra-State (InSTS) and Inter-State Transmission Systems (ISTS), enhancing project flexibility. The responsibility for grid connectivity and land allocation will be detailed in the Request for Selection (RfS) document for each project.

To promote self-reliance, the Ministry now mandates that Energy Management System (EMS) software used in BESS must be developed domestically. This aims to reduce dependence on foreign platforms and strengthen the Indian software ecosystem.

Furthermore, new quality control measures have been introduced. Renewable energy implementing agencies must ensure BESS meets top industry standards and cannot use refurbished battery cells.

The government recently launched the second tranche of the VGF program, offering Rs1.8 million/MWh to support 30 GWh of BESS capacity. Of this, 25 GWh will be spread across 15 states, while NTPC will develop 5 GWh. Funding will be disbursed in three stages to ensure project progress.