The Union Minister for Power and New & Renewable Energy has informed that the Union Cabinet, in its meeting held on 06.09.2023, has approved the scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS) with capacity of 4,000 MWh. Under the scheme, projects will be approved during a period of 3 years (2023-24 to 2025-26). The disbursement of funds will extend up to 2030-31 in 5 tranches. The cost of BESS system is anticipated to be in the range of ₹ 2.40 to ₹ 2.20 Crore/MWh during the period 2023-26 for development of BESS capacity of 4,000 MWh, which translates into Capital Cost of ₹ 9,400 Crores with a Budget support of ₹ 3,760 Crores.

VGF to the extent of up to 40% of capital cost for BESS shall be provided by the Central Government. Public and private sector entities for development of BESS shall be selected through the bidding process to be conducted by the Implementing Agency(agencies) as per the provisions of the Scheme and Bidding Guidelines.

The development of BESS capacity of 4,000 MWh is expected to result in an annual reduction of approximately 1.3 million metric tons (MMT) of carbon emissions, considering charging of BESS with Renewable Energy (RE).

Up to 4,000 MWh of energy will be available during peak hours for utilization by Discoms and other beneficiaries, depending on their specific usage patterns.

This information has been given by the Union Minister for Power and New & Renewable Energy Shri R. K. Singh, in a written reply to a question, in Rajya Sabha on December 5, 2023.

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