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India has approved an expanded Viability Gap Funding scheme to support 92GWh of battery energy storage and pumped hydro capacity. The government estimates the projects could represent ₹976 billion in investment and has set a 40% domestic-content requirement; details on project allocation and delivery schedules are not provided in the report.
India has approved an expanded Viability Gap Funding (VGF) scheme to support 92GWh of battery energy storage and pumped hydro, the government said. The expansion is intended to help make storage projects commercially viable, while a new 40% domestic-content requirement links the public support to local manufacturing and supply chains.
The government estimates the 92GWh of supported capacity could represent ₹976 billion in energy storage investment. The report does not specify how much of the capacity will be battery energy storage systems (BESS) versus pumped hydro energy storage (PHES), or how the projects will be divided among developers and states. Nor does it provide a project-by-project funding schedule.
The latest domestic-content rule requires 40% of project content to be sourced domestically. That is double the minimum 20% requirement introduced earlier in the year, according to Energy-Storage.News. The report says the initial VGF scheme offered support of up to 40% of project capital expenditure for 4GWh of projects expected to be delivered in 2030–31. The scheme was later expanded to 13.2GWh, before an additional ₹54 billion was announced in June 2025 to support 30GWh of battery storage.
Prime Minister Narendra Modi described the latest approval on X as a “massive” push for storage development and called the domestic-content rule a “unique feature.” His post framed the policy as a way to store more energy and reduce imports. Those are the government’s stated goals; the source does not provide an estimate of how much the policy will reduce imports or how quickly supported capacity will enter service.
Funding Storage as Renewables Grow
Storage can hold electricity for later use and help balance changes in supply and demand, including when renewable generation varies. The VGF scheme addresses a commercial obstacle: project costs may be difficult to recover under existing market arrangements, limiting investment even when storage can provide value to the grid. Public capital support can help projects proceed, though the approval itself does not establish that all 92GWh will be built.
The scale matters against India’s stated long-term requirements. At an October summit, Central Electricity Authority deputy director Prashant Bhamu said long-range planning indicates the country will need about 888GWh of energy storage by 2035–36, including batteries and pumped hydro. The newly approved 92GWh would be one contribution toward that planning figure, not a substitute for the wider build-out. The source does not clarify whether all of the approved capacity is additional to projects already counted in national plans.
The domestic-content condition also gives the funding a supply-chain dimension. Requiring a minimum local share could encourage domestic production and reduce reliance on imported equipment, but the report offers no forecast of the effect on costs, manufacturing capacity or project delivery. Those outcomes will depend on how the rule is applied and whether eligible local components are available at scale.
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How the VGF Scheme Expanded
The funding mechanism was put forward in India’s 2023–24 Union Budget as a way to bridge the gap between project costs and commercial returns. Its first phase offered support of up to 40% of capital expenditure for 4GWh of storage projects slated for delivery in 2030–31. The government later increased the supported capacity to 13.2GWh. In June 2025, a further ₹54 billion for 30GWh of battery storage was announced, according to the source report.
The domestic-content threshold has also tightened over time: the report says a ruling earlier this year set a minimum of 20% domestic content, before the latest approval doubled that level to 40%. Separately, Ateesh Samant, chief operating officer of independent power producer Oyster Renewable, told Energy-Storage.News that VGF had been critical in the market’s early phase. He also cited waivers on Inter-State Transmission System charges for certain storage projects as support for project economics.
Samant argued that public capital support should be followed by market rules that pay storage for flexibility, capacity and grid services. That view reflects a policy challenge beyond project construction: storage operators need revenue arrangements that reward the services they provide, rather than depending indefinitely on upfront subsidies.
““VGF has been critical” in the early phase of the market.”
— Ateesh Samant, COO of Oyster Renewable, speaking to Energy-Storage.News
Project Allocation Still Unknown
The available report does not identify the specific projects, developers, locations or funding amounts covered by the 92GWh approval. It also does not set out separate capacity totals for batteries and pumped hydro, or say when individual projects are expected to reach operation. The government’s ₹976 billion figure is an estimated investment value, not a confirmed amount of VGF disbursement.
It is also unclear how authorities will measure compliance with the 40% domestic-content rule, which components count toward the threshold, or how the requirement will affect project bids and costs. The source gives no assessment of the rule’s likely effects on local manufacturing or equipment availability. The approval establishes a policy framework, but the reported material does not confirm that all supported capacity has secured financing or construction contracts.
Project Details and Grid Rules
The next indicators will be project-level announcements: which storage developments qualify, how funding is allocated, and what delivery schedules apply. Those details will show how the 92GWh headline capacity translates into projects and when the new assets may be available to the grid. The government has not provided a timetable for those disclosures in the source material.
Policy developments may also shape demand. Reuters reported that Power Secretary Pankaj Agarwal said India plans to introduce mandatory energy-storage requirements for state utilities and expects further clean-energy tenders involving storage. Reuters also reported Agarwal described the situation as “fluid” regarding the specific capacity requirements. The size and timing of those mandates therefore remain unsettled. Separately, industry participants have called for market arrangements that compensate storage for grid services, an issue that may affect whether projects remain viable after initial VGF support.
Key Questions
What has India approved?
India approved an expanded Viability Gap Funding scheme to support 92GWh of battery energy storage and pumped hydro capacity. The government estimates the associated investment at ₹976 billion.
What is the domestic-content requirement?
The approved scheme sets a 40% domestic-content requirement, according to the report. This doubles the 20% minimum introduced earlier in the year; the source does not explain how compliance will be calculated.
Does the approval mean all 92GWh will be built?
No project list or construction confirmation is included in the source. The approval provides funding support for the stated capacity, but project awards, financing, schedules and eventual delivery remain to be detailed.
How does 92GWh compare with India’s longer-term storage needs?
Central Electricity Authority deputy director Prashant Bhamu said planning points to a need for about 888GWh by 2035–36, including battery and pumped hydro storage. The 92GWh approval is one part of that broader requirement.
What else could affect storage development?
Power Secretary Pankaj Agarwal has said mandatory storage requirements for state utilities and further storage-related clean-energy tenders are planned, Reuters reported. The specific capacity requirements remain unsettled, and market rules for paying storage operators for grid services are also an outstanding issue.
Source: energy-storage.news
