New Delhi: Union Cabinet on Wednesday approved the Scheme for Viability Gap Funding (VGF) for the development of Battery Energy Storage Systems (BESS) with budgetary support of Rs.3,760 crore.
The approved scheme envisages the development of 4,000 MWh of BESS projects by 2030-31, with financial support of up to 40% of the capital cost as budgetary support in the form of Viability Gap Funding (VGF).
The scheme was announced to harness the potential of renewable energy sources such as solar and wind power and aims to provide clean, reliable, and affordable electricity to the citizens.
“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,” an official statement said.
By offering VGF support, the scheme targets achieving a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50-6.60 per kilowatt-hour (kWh), making 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 Distribution Companies (Discoms).
In another decision, the Cabinet has approved an amount of Rs. 1164.53 crore for Industrial Development Scheme (IDS), 2017 for Himachal Pradesh and Uttarakhand.
Under this scheme, the total financial outlay was Rs.131.90 crore. This allocated fund has been exhausted during the financial year 2021-22.
The requirement of an additional fund to meet the committed liabilities up to 2028-2029 is Rs.1164.53 Crore.
“It is anticipated to generate direct employment opportunities for about 48607 people by 774 registered units” it said.