India raises subsidized battery target to 13.2 GWh

The Indian government has more than tripled the volume of BESS capacity it aims to incentivize with viability gap funding (VGF), to 13.2 GW by June 2027.

There will be no additional funding for the VGF budget, however, beyond the INR 37.6 billion ($435 million) allocated for its previous 4 GWh capacity target. The upwards revision of the target reflects how battery prices have fallen since the original budget was set, in 2023.

VGF, which is disbursed by central government to help make infrastructure projects financially viable, can pay for up to 40% of BESS capital costs.

The three-year program, which began in April 2023, pays out 10% of the value of its grants upon financial closure of BESS projects, 45% upon commissioning of sites, and 15% per year for the three years after BESS commissioning.

India’s Ministry of Power has allocated INR 4.6 billion of VGF to the Vidyut Vyapar Nigam utility of the state-owned National Thermal Power Company (NTPC), to finance 1 GWh of BESS capacity, and will award INR 3.24 billion to national body the Solar Energy Corp. of India, to help finance a further 1.2 GWh.

Some INR 16.2 billion will be allocated to the state governments of Rajasthan, Tamil Nadu, Karnataka, Gujarat, Maharashtra, Telangana, Bihar, and Kerala, to finance 6 GWh of BESS; and INR 13.5 billion will go to NTPC’s Vidyut Vyapar Nigam, the National Hydroelectric Power Corporation, and the government and state-of-Himachal-Pradesh-owned hydro company Satluj Jal Vidyut Nigam. Those three public bodies will install 5 GWh of BESS with the VGF.

The government wants the respective entities to award contracts by June, with BESS commissioning expected by June 2027.

The Ministry of Power said Vidyut Vyapar Nigam was selected to develop 1 GWh of VGF-backed BESS capacity in October and signed a battery energy storage purchase agreement to use the facilities, in December.

The ministry said the state has already issued a letter of intent for 2.5 GWh of VGF-backed BESS, with 1 GWh each allocated in Gujarat and Rajasthan, and 500 MWh in Maharashtra.

The VGF cash to be disbursed by the entities above is allocated to BESS developers after reverse-bidding auctions to determine the lowest project prices, run according to Ministry of Power guidelines.

December’s 500 MW/1 GWh Vidyut Vyapar Nigam tender secured a BESS project price of INR 226,000 per megawatt of BESS project capacity per month. That was 4.6% lower than the 237,000/MW/month secured by a 500 MW/1 GWh, VGF-backed tender in October.

From pv magazine India.