Centre issues largest tender on battery storage for solar power
The central government's nodal renewable energy implementing agency floated its largest tender to date for battery storage capacity linked to solar power generation.
The tender has been described as the first tranche of a wider government push to add dispatchable, storage-backed renewable capacity to the national grid.
Projects of this kind are typically developed on a build-own-operate basis and connected to the inter-state transmission network, allowing solar power generated during the day to be stored and supplied during non-daylight hours.
The move forms part of a broader policy effort to scale up grid-connected battery storage so that a larger share of variable renewable generation can be reliably injected into the national grid.
Battery Energy Storage Systems (BESS) and the Viability Gap Funding Scheme
Battery Energy Storage Systems charge using surplus solar or wind generation and discharge that stored energy during peak-demand or non-generation hours, addressing the core limitation of solar power: it is only available when the sun is shining.
Key Details
- The Union Cabinet approved a Viability Gap Funding (VGF) Scheme for Battery Energy Storage Systems on 6 September 2023, originally envisaging 4,000 MWh of BESS capacity by 2030-31, with financial support of up to 40% of capital cost funded through the Power System Development Fund.
- As battery prices declined, the scheme's target capacity was expanded to 13,200 MWh within the same approved budgetary outlay (about ₹9,400 crore total, including ₹3,760 crore of VGF support).
- A second tranche of the scheme, rolled out later, added support for a further 30 GWh of BESS capacity (about ₹5,400 crore of VGF support), allocated across 15 states and the state-owned NTPC.
- VGF disbursement is staggered: a smaller share on financial closure, the larger share on commissioning (Commercial Operation Date), and the remainder over the following years.
Large government-issued tenders combining solar generation with battery storage are the operational instrument through which the VGF scheme's capacity targets are converted into competitively bid, commissioned projects.
Grid Intermittency and the Energy Storage Obligation
Solar power is a variable resource — output falls to zero after sunset and fluctuates with cloud cover — which creates a mismatch between generation and the grid's need for continuous, predictable supply.
Key Details
- The Ministry of Power's National Framework for Promoting Energy Storage Systems (August 2023) set out an Energy Storage Obligation (ESO) trajectory for obligated entities such as distribution licensees, rising from 1% of total electricity consumption in FY2023-24 to 4% by FY2029-30.
- Under this framework, at least 85% of the energy stored and discharged toward meeting the obligation must originate from renewable sources.
- Storage obligations of this kind are distinct from, but complementary to, Renewable Purchase Obligations (RPOs), which separately require a minimum share of electricity consumption to come from renewable sources.
Tenders that pair solar capacity with mandatory battery storage give distribution utilities and large consumers a direct route to meet this storage obligation while receiving firmer, more dispatchable renewable power rather than a purely variable supply.
Central Electricity Authority's Storage Capacity Projections
Long-term electricity planning in India increasingly treats storage capacity as being as important as generation capacity for accommodating rising renewable energy in the grid.
Key Details
- The Central Electricity Authority estimates India will require about 411.4 GWh of energy storage by 2031-32 — roughly 236.2 GWh from battery storage and 175.2 GWh from pumped-hydro storage — to support the broader target of 500 GW of non-fossil-fuel-based generation capacity.
- Near-term projections put the energy storage capacity requirement at over 60 GW by 2029-30 to meet peak demand and maintain grid stability.
Large-scale battery storage tenders are the mechanism by which this projected national storage requirement is translated, tender by tender, into commissioned capacity connected to the grid.
Domestic Manufacturing Push — the PLI Scheme for Advanced Chemistry Cell Batteries
Rising demand for grid-scale batteries is intended to be met, over time, by cells manufactured within India rather than through imports.
Key Details
- The Production Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) battery manufacturing was approved on 12 May 2021 with a five-year outlay of ₹18,100 crore, targeting 50 GWh of domestic ACC manufacturing capacity.
- Selected beneficiary companies under the scheme include Reliance New Energy Solar and Ola Electric Mobility, among others.
- The scheme is designed to reduce import dependence for battery cells and bring down the cost of storage used both in the power sector and in electric vehicles.
As the government issues larger storage-linked tenders for the power grid, the demand they create is intended to be increasingly served by cells produced under this domestic manufacturing scheme rather than imported batteries.
- VGF Scheme for Battery Energy Storage Systems: approved 6 September 2023; original target 4,000 MWh by 2030-31 with up to 40% capital cost support
- VGF scheme capacity later expanded to 13,200 MWh within an outlay of about ₹9,400 crore (₹3,760 crore VGF support); a second tranche added support for 30 GWh (about ₹5,400 crore)
- Energy Storage Obligation trajectory: 1% of consumption in FY2023-24, rising to 4% by FY2029-30, for obligated entities
- CEA storage requirement estimate: about 411.4 GWh by 2031-32 (236.2 GWh battery storage + 175.2 GWh pumped hydro)
- ACC battery PLI Scheme: ₹18,100 crore outlay, 50 GWh target capacity, approved 12 May 2021