With an aim to bring down the cost of battery storage systems, the Union cabinet approved a scheme for viability gap funding (VGF) for its development. The scheme envisages development of 4,000 MWh of battery energy storage system (BESS) projects by 2030-31.
“It is designed to harness the potential of renewable energy sources such as solar and wind power to provide clean, reliable, and affordable electricity to the citizens,” information and broadcasting minister Anurag Thakur said.
The scheme will have a financial support of up to 40% of the capital cost as budgetary support in the form of VGF. “It is a watershed moment in the long list of pro-environment measures taken by the Government, the move is expected to bring down the cost of battery storage systems increasing their viability,” the cabinet statement said.
Thakur said the VGF for development of BESS scheme, with an initial outlay of Rs 9,400 crore, including a budgetary support of Rs.3,760 crore, signifies the government's commitment to sustainable energy solutions.
The government said by offering VGF support, the scheme targets achieving a levelized cost of storage (LCoS) ranging from Rs 5.50 - Rs 6.60 per kilowatt-hour (kWh). This will make stored renewable energy a viable option for managing peak power demand across the country.
The VGF shall be disbursed in five tranches linked with the various stages of implementation of BESS projects.
“To ensure that the benefits of the scheme reach the consumers, a minimum of 85% of the BESS project capacity will be made available to power distribution companies (Discoms). This will not only enhance the integration of renewable energy into the electricity grid but also minimize wastage while optimizing the utilization of transmission networks. Consequently, this will reduce the need for costly infrastructure upgrades,” Thakur said.
The Union cabinet also approved an amount of Rs 1,164.53 crore for Industrial Development Scheme (IDS), 2017 for Himachal Pradesh and Uttarakhand. The scheme has two components under which the eligible new industrial units and existing industrial units on their substantial expansion in the manufacturing and service sector will be provided Central Capital Investment Incentive for access to credit (CCIIAC) at the rate of 30% of the investment in plant and machinery with an upper limit of Rs.5.00 crore.
Under the second component of the scheme, industrial units will be eligible for reimbursement of 100% insurance premium on insurance of building and plant and machinery for a maximum period of 5 years from the date of commencement of commercial production/operation. It is anticipated to generate direct employment opportunities for about 48,607 people by 774 registered.