Union Cabinet Approves ₹14,500-Crore Energy Storage Scheme to Strengthen India’s Renewable Energy Infrastructure
India has taken an important step towards modernising its power sector with the Union Cabinet's approval of a ₹14,500-crore Viability Gap Funding (VGF) scheme to develop 92 GWh of grid-scale energy storage capacity. Announced by Union Minister Ashwini Vaishnaw on November 4, 2026, the initiative aims to strengthen electricity infrastructure, improve grid stability and support the country's growing renewable energy requirements.
The scheme will be implemented over five financial years, from 2026–27 to 2030–31, and is expected to attract approximately ₹97,600 crore in total investment. By encouraging large-scale energy storage projects, the initiative will help India make better use of renewable electricity while ensuring a more reliable power supply.
Developing 92 GWh of Energy Storage Capacity
The approved scheme will support three categories of energy storage technologies. Of the proposed 92 GWh capacity, 60 GWh will come from pumped hydro storage projects, 30 GWh from Battery Energy Storage Systems (BESS), and the remaining 2 GWh from alternative energy storage technologies.
This capacity addition is equivalent to approximately 170% of India's existing grid-scale energy storage capacity. The projects will receive financial assistance through the VGF mechanism, making them more financially viable and encouraging greater participation from public and private sector developers.
The allocation will take place through a tariff-based competitive bidding process. Electricity distribution utilities will be eligible for financial support for battery and pumped hydro storage projects, while alternative storage technologies will involve both public and private sector entities.
Strengthening Renewable Energy and Grid Stability
As India expands its solar and wind energy infrastructure, maintaining a consistent electricity supply has become an important priority. Solar and wind power generation depends on weather conditions and natural availability, which can create fluctuations in electricity production.
Energy storage systems provide a practical solution by storing surplus electricity when generation is high and releasing it when demand increases or renewable generation declines. This helps balance electricity supply and demand, improves grid stability and enables more efficient utilisation of clean energy.
According to the Central Electricity Authority's National Electricity Plan, India will require approximately 411.4 GWh of energy storage capacity by 2031–32. This includes 236.22 GWh from battery storage and 175.18 GWh from pumped hydro storage. The newly approved scheme will make a substantial contribution towards meeting this projected requirement.
Pumped Hydro and Battery Storage to Drive Development
Pumped hydro storage will account for the largest share of the programme, with a targeted capacity of 60 GWh. The technology uses water reservoirs at different elevations to store electricity. Excess electricity is used to pump water to an upper reservoir, which can later be released through turbines to generate power when required. Its ability to provide large-scale, long-duration storage makes it an important component of India's future electricity infrastructure.
Battery Energy Storage Systems will contribute another 30 GWh. These systems can store electricity generated during periods of high solar and wind production and supply it during peak-demand hours. Battery storage can also support frequency regulation and help manage fluctuations in the electricity grid. The remaining 2 GWh allocation for alternative technologies will encourage the development and adoption of emerging energy storage solutions, diversifying India's storage capabilities.
Promoting Domestic Manufacturing and Reducing Import Dependence
An important feature of the scheme is its emphasis on strengthening India's domestic manufacturing ecosystem. Battery storage projects supported under the programme will have to meet a minimum Domestic Content Requirement of 40%.
This provision is expected to encourage Indian manufacturers, create opportunities across the battery supply chain and support the production of essential components within the country. It will also complement existing initiatives aimed at developing domestic battery manufacturing capabilities and reducing dependence on imported components.
With demand for energy storage expected to increase significantly, strengthening indigenous manufacturing will be important for India's industrial development, technological capabilities and long-term energy security.
Building on India's Earlier Energy Storage Initiatives
The latest approval builds on previous government initiatives to accelerate the development of energy storage infrastructure. In September 2023, the Union Cabinet approved a ₹3,760-crore VGF scheme to support 4 GWh of battery storage capacity. The supported capacity was subsequently expanded to approximately 13.8 GWh.
In June 2025, another initiative was introduced to support 30 GWh of battery energy storage capacity, with ₹5,400 crore in financial assistance through the Power System Development Fund.
The newly approved ₹14,500-crore programme expands this approach by supporting battery storage, pumped hydro and alternative technologies under a broader framework. This diversified strategy will help address different electricity storage requirements while encouraging investment in India's power infrastructure.
Supporting India's Long-Term Clean Energy Goals
India has set an ambitious target of achieving 500 GW of non-fossil fuel-based installed electricity capacity by 2030. Expanding renewable energy generation is an important part of this objective, but reliable storage infrastructure is equally necessary to ensure that electricity remains available when it is needed.
The Central Electricity Authority's projections underline the growing importance of storage systems in managing the country's future electricity requirements. Investments in battery and pumped hydro projects can improve the utilisation of renewable power, reduce supply fluctuations and strengthen the overall electricity network.
The new scheme is expected to attract substantial investment, encourage technological development and create opportunities for domestic industries. It will also support the transition towards a more flexible and dependable electricity system capable of meeting India's increasing energy demand.
The MGMM Outlook
The Union Cabinet’s approval of the ₹14,500-crore energy storage scheme marks a major step towards strengthening India’s energy security and renewable energy infrastructure. With a target of developing 92 GWh of additional storage capacity, the initiative will support battery storage, pumped hydro and emerging technologies while attracting an estimated ₹97,600 crore in investment. By enabling surplus solar and wind electricity to be stored and supplied during periods of higher demand, the scheme will improve grid stability and ensure more reliable power availability. The provision requiring at least 40% domestic content in supported battery projects will also encourage Indian manufacturing and strengthen the country's technological capabilities.
This initiative reflects India's continued efforts to build a self-reliant, modern and sustainable energy ecosystem while advancing towards its 500 GW non-fossil fuel capacity target by 2030. Strengthening energy storage is essential not only for expanding renewable energy but also for reducing import dependence, attracting private investment and creating opportunities for domestic industries. The combination of government support, infrastructure development and indigenous manufacturing can help India establish a more resilient electricity network capable of meeting its growing energy requirements and supporting long-term economic development.
(Sources: Moneycontrol, Business Standard, The Economic Times)
Comments