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IESA champions battery storage growth, welcomes Government’s second VGF tranche
Industry News- Jun 19,25
India Energy Storage Alliance (IESA) supports government’s second Viability Gap Funding (VGF) tranche to advance 30 GWh of battery storage by 2028, backed by Rs 54 billion from the Power System Development Fund and showcased at India Energy Storage Week 2025 (IESW 2025).
New Delhi
India’s foremost industry body, the India Energy Storage Alliance (IESA), has applauded the government’s announcement of the second tranche of Viability Gap Funding (VGF), designed to significantly advance the rollout of standalone Battery Energy Storage Systems (BESS) across the country. This initiative supports the national objective to develop 30 GWh of BESS across 15 states, with the involvement of NTPC. The scheme targets an investment inflow of ?33,000 crore, fulfilling India’s projected BESS needs by 2028. IESA expects India Energy Storage Week (IESW) 2025 to act as a further catalyst by convening global leaders, stakeholders, and investors.
This tranche of support offers a VGF of Rs 1.8 million ($21,043) per MWh to help establish 30 GWh of BESS capacity. The funding will be drawn from the Power System Development Fund (PSDF), with an allocated budget of Rs 54 billion ($631.30 million). With clear implementation guidelines and fiscal backing, the scheme aims to bolster energy security and optimise the use of existing thermal generation and transmission systems to meet electricity demand during non-solar periods. As per the Central Electricity Authority (CEA), the need for BESS is projected to rise to 37 GWh by 2027 and 236 GWh by 2032, underscoring the urgency of timely execution.
Vinayak Walimbe, Managing Director of Customized Energy Solutions (CES), stated, “India is at a turning point in its energy journey, and the government's intensified focus on Battery Energy Storage Systems is transformative. This second VGF tranche will stimulate investment, drive innovation, and deepen collaboration across the energy value chain. By aligning national efforts and private participation, we can unlock renewable energy’s full potential and reinforce a reliable, future-ready grid.”
The VGF will be released in three stages: an initial 20 per cent upon financial closure, subject to a bank guarantee; 50 per cent on the commercial operation date (COD); and the final 50 per cent after one year of successful operation. Developers will have the flexibility to tailor discharge duration and cycle count to project-specific needs. Allocation of projects will follow a tariff-based competitive bidding system, with contracts granted under build-own-operate or build-own-operate-transfer models, typically lasting 12 to 15 years. Tariffs may be defined as Rs/MW/Month or Rs/kWh.
Debmalya Sen, President of the India Energy Storage Alliance, noted, “The guideline mandating Power Supply Agreements (PSAs) to be signed within nine months is a notable stride that can expedite project finalisation. However, frequent delays in tariff adoption—often extending a year post-award—remain a significant hindrance. Additionally, the lower VGF support increases financial strain on developers, especially newcomers who now need to demonstrate higher net worth. I strongly believe IESW will serve as a vital platform to gather industry recommendations and strengthen stakeholder alignment.”
IESW has long served as India’s leading international platform for stakeholders in battery manufacturing, energy storage, electric mobility, battery recycling, and green hydrogen sectors. Its 11th edition, to be held in Delhi from 8–10 July, aims to propel India’s energy transition and global cooperation for advancing BESS development. Delegates from over 20 countries—including France, the UK, USA, Canada, Finland, Israel, and Korea—alongside 100 regulators, 200 partners, 150 speakers, 1,000 delegates, and 10,000 attendees, will convene at the event.
The India Energy Storage Alliance (IESA) remains committed to driving the adoption of energy storage, e-mobility, and green hydrogen across India. Collaborating with policymakers, industry players, and research institutions, IESA continues to enable market development through policy engagement, thought leadership, and business facilitation.
India Energy Storage Alliance
IESA
Viability Gap Funding
BESS
PSDF
NTPC
Debmalya Sen
India Energy Storage Week
CES
Vinayak Walimbe
energy transition
India
battery storage
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