New Delhi [India], September 6 – In a strategic response to the surging energy demands and as part of its ambitious target to derive 50 percent of its energy from renewable sources by 2030, the central government, during its weekly cabinet meeting on Wednesday, declared its intent to provide viability gap funding to support businesses venturing into battery energy storage systems.
During a press conference following the cabinet meeting, Union Minister Anurag Thakur revealed the government’s plan to allocate Rs 3,760 crore for this initiative, emphasizing that it would be a fully funded central grant.
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Viability gap funding serves as a financial mechanism designed to bolster infrastructure projects that are economically justifiable but encounter minor financial shortfalls in their execution. Under this scheme, the viability gap funding is capped at a maximum of 40 percent of the total capital cost of the project.
Thakur underscored the critical role played by battery energy storage systems in addressing the mounting energy demands, asserting, “Battery energy storage systems are pivotal in meeting the surging energy demands.” He further expounded that this funding injection is anticipated to facilitate the incorporation of 4,000 MW hours of battery energy storage systems by 2025-26.
Notably, initial beneficiaries of this viability gap funding will be power distribution companies (discoms), as stated by Thakur during his announcement.
This development aligns with India’s commitments made at the COP26 summit held in Glasgow in 2021. Prime Minister Narendra Modi committed to a comprehensive “Panchamrit” agenda, encompassing ambitious targets such as reaching 500 GW of non-fossil electricity capacity, securing half of the nation’s energy needs from renewable sources, and reducing emissions by 1 billion tons by 2030. India also aspires to curtail the emissions intensity of its GDP by 45 percent and ultimately attain net-zero emissions by 2070.
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The shift towards energy storage projects holds particular significance for India, which heavily relies on energy imports. By investing in novel energy sources and technologies, India aims to diminish its dependence on imported fuels while ensuring a sustainable and resilient energy future.