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India Launches Second Tranche of VGF to Support 30 GWh of BESS Across 15 States and NTPC

The Ministry of Power has rolled out the second tranche of Viability Gap Funding (VGF) to support the development of 30 GWh of standalone Battery Energy Storage Systems (BESS) across 15 states and NTPC. Building upon the first tranche which backed 13.2 GWh, this initiative aims to accelerate India’s energy storage targets in line with projections by the Central Electricity Authority (CEA), which estimates the need for 37 GWh by 2027 and 236 GWh by 2032.

The second tranche provides a budgetary support of Rs5,400 crore through the Power System Development Fund (PSDF), with an incentive of Rs18 lakh/MWh. Major state allocations include Rajasthan, Gujarat, and Maharashtra (4 GWh each), Karnataka and Andhra Pradesh (2 GWh each), followed by Tamil Nadu, Madhya Pradesh, Telangana, and Uttar Pradesh (1.5 GWh each). Smaller allocations of 500 MWh each go to Haryana, Kerala, Punjab, Chandigarh, Odisha, and Uttarakhand.

NTPC is allotted 5 GWh for enhancing the use of existing thermal and transmission infrastructure, especially during non-solar hours. Disbursement of VGF will follow a structured schedule: 20% on finalization of contract, 50% upon commissioning, and 30?ter one year of operation. The projects are expected to be commissioned within 18 months with a discharge duration of 2 hours and an average usage of 1.5 cycles/day. The business models allowed include BOO and BOOT, with a PPA duration of 12–15 years.

PPAs must be signed within 90 days of guideline issuance, and proposals must be submitted within 60 days for approval. This significant policy push is expected to strengthen grid stability, promote renewable integration, and advance India’s clean energy transition.