India announces a significant boost to its energy storage sector through a ₹5,400 crore Viability Gap Funding scheme, transmission relief, and relaxed approvals, aiming to accelerate renewable integration and grid stability.
India has stepped up its push for energy storage with a package of funding support, tax-like transmission relief and easier approvals designed to make batteries and pumped hydro more attractive for investors while helping the grid absorb more renewable power. In a written reply to the Rajya Sabha, Union Minister of State for Power Shripad Naik said the government is using a mix of financial incentives and rule changes to improve reliability, keep costs under control and speed deployment across the power sector.
At the centre of the effort is a Viability Gap Funding scheme worth ₹5,400 crore, drawn from the Power System Development Fund, to back 30 GWh of battery energy storage systems. Industry reports said the second tranche of the scheme is intended to support projects in 15 states and at NTPC, with assistance set at ₹18 lakh per MWh. The measure adds to an earlier 13.2 GWh package already under implementation and is aimed at improving the economics of large-scale storage so it can be paired more easily with solar and other renewables.
The government has also extended a 100% waiver of inter-state transmission system charges for eligible storage projects. According to the ministry’s announcement, co-located battery projects commissioned by June 2028 and hydro pumped storage projects awarded by June 2028 can qualify for the full relief, which will then taper by 25% a year. Officials say the move should lower delivered power costs and encourage developers to place storage where it can most effectively support the grid.
Alongside the financial incentives, the Ministry of Power has eased approval rules for some hydro and pumped storage schemes. The threshold for Central Electricity Authority concurrence has been raised from ₹1,000 crore to ₹3,000 crore for hydro generating stations and open-loop pumped storage projects, while off-stream closed-loop pumped storage projects no longer need CEA concurrence. The Central Electricity Authority has also advised solar developers to consider adding storage equal to at least 10% of installed solar capacity, with a minimum duration of two hours, a step meant to make solar output more dispatchable and improve system stability. Recent amendments to the Electricity Rules further allow individual consumers to own, lease, operate or develop storage systems, widening the market beyond utilities and large developers.
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