Power ministry announces additional ₹5,400 cr VGF for 30 GWh battery energy storage

New Delhi: Union minister for power Manohar Lal on Tuesday said the government will roll out an additional viability gap funding (VGF) worth ₹5,400 crore for setting up 30 GWh of battery energy storage systems (BESS).

Addressing journalists, the minister announced several plans to meet rising power demand and achieve India's ambitious net zero target of 2070. The incentive will be over and above the existing incentive worth ₹3,700 crore VGF under which 13.2 GWh of BESS is currently under implementation.

The initiative will attract investments worth ₹33,000 crore, he said. Under the scheme 15 states will receive allocations for 25 GWh of storage capacity and state-run NTPC Ltd will get 5 GWh. The Union minister said the first round of tender for the new VGF will be floated within 3 months.

Renewable energy goals

"India is targeting 393 GW of renewable energy capacity (293 GW solar and 100 GW wind) by 2030. But renewable energy is highly intermittent and needs energy storage solutions to ensure round the clock power supply and grid stability. Hence, BESS is essential especially to meet peak demand during non-solar hours," Lal told reporters.

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Solar and wind are intermittent sources of renewable energy and India is targeting 500 GW of non-fossil capacity by 2030. Storage systems including BESS and pump storage plants (PSP) are expected to play a key role in stabilizing power supply and the grid.

According to the India Energy Storage Alliance, an industry grouping, the country’s energy storage sector is likely to attract ₹4.79 trillion investment by 2032. The CEA estimates a project requirement of 411.4 GWh (175.18 GWh from PSP and 236.22 GWh from BESS) of energy storage systems by FY32.

"The first tender under the new VGF allocation would be launched in three months," the minster said.

Lal also said that during the recent conflict with Pakistan, the power sector in the country, largely the state load dispatch centres (SLDC) faced a number of cyber-attacks which were thwarted adequately via firewalls in the Indian power system.

On 3 May, Mint reported that India has stepped up the security of its national power grid as heightened tensions with Pakistan revive memories of cyberattacks in recent years and the power ministry has tightened security protocols at the load dispatch centres which manage the demand and supply of power.

He said that work is underway to set up undersea transmission cables to the UAE and Saudi Arabia with an estimated capex of ₹90,000 crore. High-Voltage Direct Current (HVDC) sub-sea transmission cables of 1,400 kilometres and 1,600 kilometres would be established from India to Saudi Arabia and the UAE respectively. India has already signed agreements with both the countries for the inter-connectivity of the power grids.

Further, as government aims to boost nuclear energy in the country in order to increase the base load capacity to maintain grid stability amid rising renewable energy capacity, the minister said that the Centre has suggested states, which are not in the Seismic zone 5 (Very High Damage Risk Zone due to earthquake), to set up nuclear power projects. Currently, India has over 8 GW of installed nuclear power capacity and aims to reach 22 GW by 2032 and 100 GW by 2047.

In another development, the power minister said that the government has decided to standardize temperatures of air conditioners in the country and mandate a range.

"The temperature in ACs will be set between 20 degree celsius and 28 degree celsius," he said, adding that guidelines on this would be released soon.

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The move is aimed at energy conversation, energy efficiency and curbing climate change. Cooling requirements is a key factor for the country's peak power demand touching record levels in the past three years.

Last year, India witnessed its highest-ever peak power demand of 250 GW. This year, it has hit 241 GW so far, on 5 June. The Central Electricity Authority has projected a peak of 270 GW this summer season.

The minister said the power sector is prepared to meet the projected peak demand.