The Union power ministry has announced a viability gap funding (VGF) scheme worth Rs.5,400 crore for supporting 30,000 MWh (or 30 GWh) of BESS capacity.
The scheme will provide VGF of Rs.18 lakh per MWh with a view to supporting the creation of 30 GWh of battery energy storage system (BESS) capacity.
This scheme will complement the ongoing VGF scheme where 13.2 GWh of BESS capacity has been approved so far. Central Electricity Authority (CEA) has estimated that India would need 37 GWh of BESS capacity by 2027 and this is expected to increase to 236 GWh by 2032.
The newly-announced Rs.5,400-crore VGF shall be fully funded by from Power System Development Fund (PSDF) and the disbursement of funds shall be as per procedure applicable for PSDF.
Eligible entities
The VGF of each BESS project shall be disbursed to eligible entities/renewable energy implementation agencies (REIA) once CEA certifies the achievement of the disbursement schedule milestone, and submission of bank guarantee.
Eligible entities will mean state utilities or agencies authorized by state governments or the Central government.
NTPC has been named as an “eligible entity” under the scheme and has been assigned 5,000 MWh of BESS capacity. The remaining 25,000 MWh has been allocated to eligible entities across 15 states including Rajasthan, Maharashtra, Gujarat, Tamil Nadu, Karnataka, Andhra Pradesh, Madhya Pradesh, Telangana, Uttar Pradesh, Haryana, Kerala, Punjab, Chhattisgarh, Odisha and Uttarakhand.
Commissioning period
The BESS projects are required to be commissioned within a period of 18 months from the date of signing of the battery energy storage power purchase agreement (BESPA) or the power purchase agreement (PPA).
Disbursement schedule
On financial closure (subject to submission of bank guarantee), 20 per cent of the VGF amount will be disbursed. Another 50 per cent will be disbursed on attaining of commercial operations date (COD) and the remaining 30 per cent, after completion of the first year from COD.
Bidding process
BESS projects shall be awarded under the tariff-based competitive bidding (TBCB) mechanism, which falls under Section 63 of the Electricity Act, 2003. Contracts will be awarded under the BOO/BOOT model, preferably for a contract period of 12-15 years. However, NTPC will be allowed to implement its allocated 5,000 MWh capacity under Section 62 of the Electricity Act, 2003, which is the regulated tariff mechanism (RTM) framework.
Connectivity
The BESS projects may be connected to the intrastate/interstate transmission system (InSTS or ISTS). Land for the project as well as grid connectivity shall be provided by the respective eligible entities.
RE integration
The broad objective of this VGF scheme is to develop 30 GWh of BESS capacity, in turn to ensure grid integration of renewable energy, and ensuring reliable electricity supply. It is estimated that with an installation target of 393 GW of RE capacity (293 GW of solar and 100 GW of wind), variable renewable energy will constitute around 50 per cent of the country’s total installed generation capacity by 2030.
Featured photograph (source: SPML Infra Ltd) is for representation only
