Context:
Recently, the Union Cabinet, chaired by the Hon’ble Prime Minister of India, approved the Scheme for Viability Gap Funding (VGF) for the development of Battery Energy Storage Systems (BESS).
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Battery storage
- About Battery Energy Storage Systems (BESS)
Battery storage
- Battery storage, also known as battery energy storage systems (BESS), refers to devices designed to capture and store energy, typically generated from renewable sources such as solar and wind.
- This stored energy can be released and utilized when there is a demand for power, helping to balance energy supply and demand more efficiently.
About Battery Energy Storage Systems (BESS):
- Development Goals: The approved scheme targets the development of 4,000 MWh of Battery Energy Storage Systems (BESS) projects by the year 2030-31.
- Funding: The government provides financial support for BESS projects, offering up to 40% of the capital cost in the form of Viability Gap Funding (VGF). This funding will be disbursed in five tranches linked to different project implementation stages.
- Levelized Cost of Storage (LCoS): The scheme aims to achieve a Levelized Cost of Storage (LCoS) ranging from Rs. 5.50-6.60 per kilowatt-hour (kWh) through VGF support. This cost-effectiveness makes stored renewable energy a viable option for managing peak power demand nationwide.
- Distribution Companies (Discoms): To ensure consumer benefits, a minimum of 85% of BESS project capacity will be made available to Distribution Companies (Discoms).
- Selection Process: The selection of BESS developers for VGF grants will be conducted through a transparent and competitive bidding process. This approach promotes fairness for both public and private sector entities.
- Significance: The scheme has several significant advantages:
- Enhancing the integration of renewable energy into the electricity grid.
- Minimizing energy wastage while optimizing transmission network utilization.
- Reducing the need for expensive infrastructure upgrades.
- Encouraging competition and fostering a robust ecosystem for BESS, attracting investments and generating opportunities for associated industries.
- Supporting clean, reliable, and affordable electricity for citizens by harnessing the potential of renewable energy sources like solar and wind power.
