India’s $455 million incentive scheme for battery storage projects

India’s $455 million incentive scheme for battery storage projects : Sources

According to the two government sources, India will offer 37.6 billion rupees in incentives to companies that build battery storage projects totaling 4,000 megawatt hours under a scheme announced earlier this year.

The scheme, the specifics of which were not previously disclosed, is intended to support battery storage projects that are critical to India’s ambitious plan to increase renewable energy capacity to 500 gigatonnes by 2030.

It also aims to reduce the current cost of battery energy storage from 5.5 to 6.5 rupees per unit.

Battery storage, which is used to back up intermittent renewable power supply and stabilize the grid, is a developing technology with few large-scale operational projects around the world. 

The scheme intends to develop large-scale battery energy storage systems to reduce costs through competitive procurement.

According to the sources, the government will provide so-called viability gap funding—incentives to cover the risks of developers of critical infrastructure projects that are or may become economically unviable – in the form of grants for three years.

The scheme is also expected to attract private investments worth 56 billion rupees.

The contracts will be paid out in five installments until 2030–31, according to one of the sources, who requested anonymity because the proposal is not yet public and requires federal cabinet approval.

Contracts will be awarded through a competitive process, with the lowest bidder chosen, they stated.

India’s power secretary, Alok Kumar, said the country “is committed to energy transition while meeting the demands of energy security of its population”.

“A battery energy storage scheme is a step in this direction,” he added. He said battery storage systems are a crucial part of enabling the energy transition.

Reliance Industries, Adani Power, and JSW Energy are among the Indian conglomerates planning large-scale battery plants.

The proposal, which was announced by Finance Minister Nirmala Sitharaman in her budget speech on February 1, will now be considered by the country’s cabinet, which is led by Prime Minister Narendra Modi. There is currently no timetable for its approval.

India currently has 37 MWh of battery storage capacity. According to estimates from its power sector planning body, it will require 236 gigatonnes (GWh) of battery energy storage, as well as 27 GW of pump storage projects by 2031-32.