Union Cabinet Clears Rs 17,500 Crore Scheme to Boost Grid-Scale Energy Storage

The Union Cabinet approved a new viability gap funding scheme with a financial outlay of Rs 17,500 crore to promote grid-scale energy storage systems across the country. Under this policy, the government plans to build 92 gigawatt-hour of total energy storage capacity. Out of this total target, 30 gigawatt-hour will go toward battery energy storage systems, 60 gigawatt-hour will focus on pumped hydro storage, and 2 gigawatt-hour will support emerging storage technologies. Battery energy storage systems store electricity through chemical means and release it when needed, with lithium-iron-phosphate units currently leading due to falling costs and long lives. Pumped hydro storage uses surplus electricity to pump water to a higher reservoir, then releases it downhill through turbines to generate power when demand peaks. This new plan is set to support storage capacity equal to 170% of India's current grid-scale storage total, while the nation works toward a larger target of 411 gigawatt-hour by the year 2031-32. Energy storage has become vital as India expands renewable energy to meet climate goals, helping solve the problem of power that is abundant in some hours and low in others. The Ministry of Power is already running two older viability gap funding schemes for battery storage. The first scheme backs 13.8 gigawatt-hour with Rs 3,760 crore, where letters of award for 12.7 gigawatt-hour and financial closure for 6.54 gigawatt-hour are already complete. A second scheme from June 2025 backs 30 gigawatt-hour with Rs 5,400 crore from the Power System Development Fund, allocating 25 gigawatt-hour across 15 states and 5 gigawatt-hour to NTPC Ltd.

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Grid-scale storage helps stabilize power grids by absorbing excess solar and wind generation instead of letting it go to waste during high-output hours. This infrastructure bridges the gap between fluctuating renewable generation and peak electricity demand in households and industries.