India’s Ministry of Power Unveils Visionary Plan for Energy Storage Revolution

Posted On - 9 September, 2023 • By - King Stubb & Kasiva

The Ministry of Power announced a transformative plan to drive the expansion of Energy Storage Systems (“ESS”) in a visionary move to revolutionize India’s energy environment. This comprehensive framework, aimed to ensure affordable, clean, steady, and secure power, includes several policies to help the ESS industry grow. It will include the following:

  1. Boosting Energy Storage with Viability Gap Funding (“VGF”): The proposal from the Ministry involves the implementation of VGF for Battery Energy Storage Systems (“BESS”). BESS projects could receive up to 40% of their capital expenses in financial support under this plan if they are completed and commissioned within 18 to 24 months. The VGF intends to increase the financial viability of BESS by providing competitive pricing and enabling effective peak power management.
  2. Empowering Pumped Storage Projects and Infrastructure Growth: Powered Storage Projects are expected to profit from the plan’s emphasis on infrastructural development. Aside from their primary function of energy storage, these projects will help to drive regional growth by constructing critical infrastructure, such as transmission networks to the pooling locations.
  3. Green Finance for Sustainable Energy Storage: To promote ESS expansion, the Ministry is looking into government-concessional green financing solutions like as Sovereign Green Bonds. These bonds will be used to fund environmentally friendly infrastructure and activities to reduce emissions, while financial institutions such as Power Finance Corporation and REC will provide long-term loans to support ESS projects.
  4. ESS in Resource Adequacy Plans and Bidding Guidelines: The Ministry intends to include ESS in Resource Adequacy Plans, providing a defined framework for long-term demand. This is consistent with the regulatory requirement for continuous power supply, compelling Distribution Companies (“DISCOMS”) to incorporate ESS into their Resource Adequacy Plans. Furthermore, the government will release technology-neutral bidding procedures for various ESS projects, increasing industry competitiveness.
  5. ESS Integration with Renewable Energy Ventures: New renewable energy projects will be encouraged to have at least 5% ESS capacity. This action encourages the combination of renewables and storage, which improves grid stability and capacity value.
  6. Tax and Duty Waivers, Quality Standards, and Research and Development: To catalyse the ESS industry, the government would grant tax and duty exemptions, as well as incentives for local manufacturing and technological investment. An Approved List of Models and Manufacturers (“ALMM”) will be used to maintain quality standards, while a dedicated nodal agency will monitor research and development initiatives, facilitating information exchange.
  7. Sustainability and Recycling: Specialized waste management facilities for electronic trash from ESS components will be part of the sustainability initiatives. An organized mechanism for repurposing ESS components will be devised, and abandoned mines will be converted into pumped storage projects, promoting sustainability aims.


The innovative plan of India’s Ministry of Power intends to transform the energy landscape by encouraging the expansion of Energy Storage Systems. This strategy, which includes initiatives in financing, infrastructure, and laws, aims to make India’s energy sector cleaner, more reliable, and sustainable in the future.