india’s Ministry of Power has announced a second tranche of the national viability gap funding (VGF) scheme, which will allocate INR 54 billion ($631 million) to help make 30 GWh of BESS projects financially viable. The cash will come from India’s Power System Development Fund.

The new phase of the scheme will extend financial support to 15 states and the NTPC, with INR 1.8 million per megawatt-hour of BESS capacity allocated for each project. Of the total 30 GWh target, 25 GWh will be distributed among 15 states to meet their energy storage needs while 5 GWh will be allocated to the NTPC to optimize the use of existing thermal generation and electricity transmission infrastructure, and to supply electricity during non-solar hours in a reliable and cost-effective manner.

The state-wise allocation is as follows:

• 4 GWh each: Rajasthan, Gujarat, Maharashtra
• 2 GWh each: Karnataka, Andhra Pradesh
• 1.5 GWh each: Tamil Nadu, Madhya Pradesh, Telangana, Uttar Pradesh
• 500 MWh each: Haryana, Kerala, Punjab, Chhattisgarh, Odisha, Uttarakhand

The VGF will be disbursed in three stages:

• 20% upon financial closure of the projects
• 50% upon commissioning
• 30% after one year of operation from the commissioning date

Projects must be commissioned within 18 months from the signing of a battery energy storage purchase agreement or power purchase agreement. The projects will be awarded through a tariff-based, competitive-bidding process.

According to the Central Electricity Authority, India requires 37 GWh of BESS capacity by 2027 and 236 GWh by 2031-32. So far, 13.2 GWh of BESS capacity has been approved under the ongoing VGF scheme.