Cabinet Clears Rs 14,500 Crore VGF for 92 GWh Energy Storage

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a Viability Gap Funding (VGF) Scheme for Development of Grid-Scale Energy Storage Systems on 4 November 2026. The Ministry of Power scheme carries support of Rs 14,500 crore for FY 2026-27 to FY 2030-31 and backs 92 GWh of storage capacity that is yet to be commissioned.

How much capacity, and of what kind

The 92 GWh splits three ways: 60 GWh of hydro Pumped Storage Plant capacity, 30 GWh of Battery Energy Storage System capacity and 2 GWh through alternative storage technologies. Total investment in these projects is put at Rs 97,600 crore, with the VGF only bridging the gap that makes them bankable.

Why the numbers matter

The new capacity equals 170 per cent of all grid-scale storage India has today, so the scheme more than doubles the country's storage base in one stroke. It is also the step towards the 411 GWh of grid-scale storage the power system is reckoned to need by 2031-32.

Bidding and who is eligible

Capacity will be allotted through tariff-based competitive bidding. Electricity distribution companies in both the public and private sectors may seek VGF for battery storage and pumped storage projects, while projects using alternative storage technologies may be taken up by public and private entities.

Push for Indian manufacturing

Battery storage projects must meet a minimum Domestic Content Requirement of 40 per cent. The condition is meant to pull demand towards Indian-made cells and components, cut reliance on imports and sit alongside the supply-side incentives already running for battery manufacturing.

What it is expected to deliver

Storage lets a grid soak up solar and wind power when it is plentiful and release it when it is not, which is the core problem with renewable generation. The government expects steadier grid operation, round-the-clock supply at affordable rates, less dependence on conventional plants for balancing, and firmer energy security, in line with Atmanirbhar Bharat and Viksit Bharat.