Pariksha SaathiCabinet approves Rs 14,500 crore Viability Gap Funding scheme for 92 GWh of grid-scale energy storage
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Viability Gap Funding (VGF) Scheme for Development of Grid-Scale Energy Storage Systems, with total financial support of Rs 14,500 crore for the period FY 2026-27 to FY 2030-31, the Government said on 4 November 2026. The scheme aims to support the development of 92 GWh of energy storage capacity, yet to be commissioned, across the country: 60 GWh of Hydro Pumped Storage Plant (PSP) capacity, 30 GWh of Battery Energy Storage System (BESS) capacity and 2 GWh through alternative energy storage technologies, with a total estimated investment of Rs 97,600 crore. According to the release, it will support new capacities equivalent to 170% of the present-day grid-scale energy storage capacity in the country and help meet the required grid-scale energy storage capacity of 411 GWh by 2031-32. Capacity will be allocated through a tariff-based competitive bidding process; public and private sector electricity distribution companies will be eligible for VGF support for BESS and hydro PSP projects, while projects based on alternative storage technologies will be implemented by public and private sector entities. To promote indigenous manufacturing, BESS projects will be subject to a minimum Domestic Content Requirement (DCR) of 40%. The Government said the scheme will facilitate large-scale integration of renewable energy, address the variability of renewable energy generation, strengthen grid stability, support reliable, affordable and round-the-clock power supply and reduce import dependence.
Drafted with AI assistance from the official PIB release linked above and checked against it by a second AI pass. Not line-edited by a human.
Learning context
On 6 September 2023 the Ministry of Power announced that the Union Cabinet had approved a scheme for Viability Gap Funding (VGF) for the development of Battery Energy Storage Systems (BESS). It envisaged the development of 4,000 MWh of BESS projects by 2030-31, with financial support of up to 40% of the capital cost as budgetary support in the form of VGF; the scheme had an initial outlay of Rs 9,400 crore, including budgetary support of Rs 3,760 crore. Through VGF it targeted a Levelized Cost of Storage (LCoS) of Rs 5.50-6.60 per kilowatt-hour (kWh), and the VGF was to be disbursed in five tranches linked to the stages of implementation of the projects. A minimum of 85% of the BESS project capacity was to be made available to distribution companies (Discoms), and BESS developers were to be selected through a transparent competitive bidding process, which the Ministry said would promote a level playing field for both public and private sector entities.
Check yourself: how much BESS capacity did the VGF scheme approved by the Cabinet in September 2023 envisage by 2030-31, and what minimum share of the BESS project capacity was to be made available to Discoms?
4,000 MWh of BESS projects; a minimum of 85%.
Revision task: from this release, note the scheme's financial support and period, the total capacity it supports and its three parts, the total estimated investment, the required capacity by 2031-32, who is eligible for VGF, how capacity will be allocated and the domestic content requirement for BESS; from the note, the capacity, support ceiling, outlay, tranches and Discom share of the 2023 BESS scheme. Note the units: storage capacity here is given in GWh (gigawatt-hours) and MWh (megawatt-hours).
Test yourself
The Union Cabinet has approved a Rs 14,500 crore Viability Gap Funding scheme for grid-scale energy storage (announced on 4 November 2026). How much energy storage capacity in total does the scheme aim to support?
Show the answer
Answer: 92 GWh
The scheme aims to support the development of 92 GWh of energy storage capacity, yet to be commissioned: 60 GWh of hydro pumped storage, 30 GWh of battery energy storage and 2 GWh through alternative technologies. 411 GWh is the grid-scale storage capacity the release says will be required by 2031-32, while 170 is a percentage, not a capacity: the new capacities will be equivalent to 170% of the present-day grid-scale capacity.
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