Cabinet Approves ₹14,500 Crore for 92 GWh Energy Storage Initiative

On November 4, 2026, the [Union Cabinet](/topic/union-cabinet), under the leadership of Prime Minister Shri [Narendra Modi](/topic/narendra-modi), approved a groundbreaking Viability Gap Funding (VGF) Scheme aimed at developing grid-scale energy storage systems across India. The scheme allocates ₹14,500 crore for the period from FY 2026-27 to FY 2030-31, targeting the establishment of 92 GWh of energy storage capacity. This initiative is poised to create new capacities equivalent to 170% of the current grid-scale energy storage capacity in the country, which stands at approximately 54 GWh.

The primary objective of this scheme is to enhance India’s power sector infrastructure, facilitating the integration of [renewable energy](/topic/renewable-energy) sources into the grid. The initiative is expected to ensure a reliable, affordable, and round-the-clock power supply, addressing the growing energy demands of the nation. The total estimated investment for the development of this energy storage capacity is projected at ₹97,600 crore, with the VGF support significantly improving the financial viability of the projects.

The scheme will specifically support:

This diversified approach not only aims to bolster energy storage capacity but also to promote the use of innovative technologies in the energy sector.

• 30 GWh of Battery Energy Storage Systems (BESS)
• 60 GWh of Hydro Pumped Storage Projects (PSP)
• 2 GWh of emerging storage technologies

A notable feature of the VGF scheme is its emphasis on domestic manufacturing. To promote indigenous production, the scheme mandates a minimum Domestic Content Requirement (DCR) of 40% for BESS projects. This requirement is designed to reduce India's dependence on imported components, thereby fostering local industry and creating job opportunities within the country. The initiative aligns with the broader vision of Atmanirbhar Bharat (self-reliant India), aiming to build a robust domestic manufacturing ecosystem for energy storage technologies.

The implementation of this scheme is expected to significantly enhance grid stability and facilitate the integration of renewable energy sources. By deploying large-scale energy storage solutions, the initiative will address the inherent variability of renewable energy generation, such as solar and wind power. This capability is crucial for maintaining a balanced and reliable power supply, particularly during peak demand periods or when renewable generation is low.

The VGF scheme will allocate energy storage capacity through a tariff-based competitive bidding process, allowing both public and private sector electricity distribution companies to participate. This competitive approach is anticipated to drive efficiency and innovation in the sector, ultimately benefiting consumers through improved service delivery and reduced costs.

As India aims to achieve a grid-scale energy storage capacity of 411 GWh by 2031-32, the approval of this VGF scheme marks a pivotal step towards realizing this ambitious target. The initiative is not only about enhancing energy storage capacity but also about ensuring long-term energy security for the nation. By reducing reliance on conventional energy sources and promoting renewable energy integration, India is positioning itself as a leader in sustainable energy practices.

The scheme is expected to create a ripple effect across various sectors, stimulating investments, fostering innovation, and ultimately contributing to the country’s economic growth. The government’s commitment to enhancing energy security through this initiative reflects a proactive approach to addressing the challenges posed by climate change and energy demand.

The VGF scheme represents a significant intervention in India's energy landscape, paving the way for a more resilient and flexible electricity system. As the country continues to embrace renewable energy, initiatives like this will be crucial in ensuring that India meets its energy needs sustainably and efficiently.