The Ministry of Power has outlined a series of financial incentives and regulatory reforms to support energy storage, improve grid reliability, and maintain affordability across India’s power sector.

In a written reply to the Rajya Sabha, Union Minister of State for Power Shri Shripad Naik highlighted the government’s measures to accelerate investments in Battery Energy Storage Systems (BESS), pumped storage projects, and other clean energy infrastructure.

A key initiative is the Viability Gap Funding (VGF) scheme, which provides ₹5,400 crore through the Power System Development Fund for developing 30 GWh of Battery Energy Storage Systems. The funding is intended to improve the financial viability of large-scale storage projects and support their integration with renewable power.

The government has also introduced a 100 percent waiver of Inter-State Transmission System charges for eligible energy storage projects. Co-located battery storage projects commissioned by June 2028 and Hydro Pumped Storage Projects for which construction work is awarded by June 2028 can receive the full waiver. The benefit will subsequently reduce by 25 percent each year.

To reduce administrative delays, the Ministry has eased approval requirements for certain hydro and pumped storage projects. The threshold for Central Electricity Authority concurrence for hydro generating stations and open-loop pumped storage projects has been increased from ₹1,000 crore to ₹3,000 crore. Off-stream closed-loop pumped storage projects have also been exempted from the requirement of CEA concurrence.

The government is simultaneously focusing on improving the reliability and flexibility of renewable power. The Central Electricity Authority has advised solar power developers to consider co-locating energy storage systems equivalent to at least 10 percent of installed solar capacity, with a minimum storage duration of two hours. The measure is aimed at making solar generation more dispatchable and supporting grid stability.

Further regulatory changes have expanded participation in the energy storage market. Amendments to the Electricity Rules allow individual consumers to develop, own, lease, or operate energy storage systems. This could encourage greater deployment of storage by commercial, industrial, and other electricity consumers.

These measures reflect the government’s broader effort to build a financially sustainable and flexible electricity system. By combining financial support, transmission incentives, simplified approvals, and regulatory reforms, India is seeking to accelerate energy storage deployment while improving the integration of renewable energy into the national grid.