Cabinet approves ₹14,500 crore scheme for 92 GWh of grid-scale energy storage

The scheme runs for five years, from FY2026-27 to FY2030-31, and covers only storage capacity that is not yet commissioned, the government said in a statement after the Cabinet meeting chaired by Prime Minister Narendra Modi.

Of the 92 GWh, 60 GWh is for pumped hydro, 30 GWh for battery energy storage systems and 2 GWh for alternative technologies, the statement said. It put expected investment at ₹97,600 crore and said the new capacity equals 170% of India's present grid-scale storage, helping meet a projected requirement of 411 GWh by 2031-32.

How capacity will be allocated

Under the scheme, capacity will be allocated through tariff-based competitive bidding. Public and private electricity distribution companies will be eligible for support on battery and pumped hydro projects, while alternative-technology projects can be implemented by public or private entities. Battery projects must meet a minimum domestic content requirement of 40%. The government said the condition would encourage domestic manufacturing, create opportunities for Indian industry, reduce dependence on imported components and complement existing supply-side incentives for battery production.

The ₹14,500 crore outlay equals about 15% of the ₹97,600 crore the government expects the projects to attract. The government said the support is meant to improve the financial viability of storage projects and speed up deployment. The scheme also goes beyond earlier rounds: two previous VGF initiatives backed a combined 43.85 GWh of battery storage, Moneycontrol reported, while this one adds pumped hydro and alternative technologies to its battery allocation.

Why storage is needed

India can produce surplus solar power in the afternoon and still struggle to meet demand after sunset, ThePrint reported. Solar output peaks around midday while household demand climbs in the evening, and wind output is less predictable. Storage takes in electricity when supply is plentiful and releases it when the grid needs it.

Pumped hydro projects can hold large amounts of energy for longer periods, while batteries respond quickly and suit short-duration support, according to ThePrint.

Anujesh Dwivedi, a partner at Deloitte India, said in comments reported by The Hindu BusinessLine that the sharp rise in renewable capacity addition has made scaling storage an immediate priority, and that the inclusion of pumped hydro alongside batteries and alternative technologies is the scheme's main feature.

The 92 GWh the scheme backs covers about 22% of the 411 GWh the government projects India will need by 2031-32, leaving the rest to be built without this support.