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Source: The post is based on the article “Cabinet approves the Scheme titled Viability Gap Funding for development of Battery Energy Storage Systems(BESS)” published in PIB on 6th September 2023
What is the News?
The Union Cabinet approves the Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS).
What are Battery Energy Storage Systems (BESS)?
Battery storage or battery energy storage systems (BESS) are devices that enable energy from renewables, like solar and wind, to be stored and then released when the power is needed most.
India needs to develop BESS for making round-the-clock renewable energy supply possible.
What is Viability Gap Funding(VGF)?
Viability Gap Finance means a grant to support projects that are economically justified but not financially viable.
Viability Gap Funding is provided as a grant one-time or deferred with the objective of making a project commercially viable.
What is the Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS)?
Aim: To harness the potential of renewable energy sources such as solar and wind power with the aim to provide clean, reliable, and affordable electricity to the citizens.
Target: The scheme envisages development of 4,000 MWh of BESS projects by 2030-31.
Financial support: Up to 40% of the capital cost will be supported in the form of Viability Gap Funding (VGF).The entire viability gap funding (VGF) will be borne by the Central Government.
– The VGF shall be disbursed in 5 tranches linked with the various stages of implementation of BESS projects.
– To ensure that the benefits of the scheme reach the consumers, a minimum of 85% of the BESS project capacity will be made available to Distribution Companies (Discoms).
Significance: The scheme is in sync with India’s ambition to meet its 50% of energy requirements through renewable energy and non-fossil energy sources by 2030 and also help reduce carbon emission.
– Note: Solar energy has increased from 2.6 GW in 2014 to 71 GW at present while wind energy has increased from 21 GW (in 2014) to 40 GW.
India is meeting its 25% of energy demand from renewable energy, including from large hydro plants.
