India Unveils Battery Storage Subsidy Scheme As Part Of Renewable Push

Jun 08, 2023

India has unveiled an ambitious initiative to provide 37.6 billion rupees ($455.2 million) in subsidies to stimulate the establishment of battery storage projects. The projects, which are expected to yield an impressive 4,000-megawatt hours (MWh) of energy, are part of a broader scheme announced earlier this year to bolster the country's renewable energy capacity to a whopping 500 gigawatts (GW) by 2030.

While specifics about the scheme were initially undisclosed, the government has clarified that one of its key objectives is to lower the cost of battery energy storage from the existing rate of 5.5-6.5 rupees per unit. The program primarily targets large-scale battery energy storage systems to decrease costs through competitive bidding.

Battery storage technology, an innovative solution to ensure continuous renewable power supply and stabilize the grid, is still a burgeoning sector. Very few large-scale operations exist globally, further emphasizing the importance of India's initiative.

To facilitate this initiative, the Indian government will implement viability gap funding — an incentive-based approach to offset potential economic risks developers may face while building critical infrastructure projects. These grants will be available for a period of three years, sources reveal.

Alongside the government funding, the scheme is projected to attract 56 billion rupees in private investments.

The roll-out of the contracts will be executed in five stages until the financial year 2030-31. This information was provided by a source who wished to remain anonymous as the proposal has yet to gain public traction and awaits federal cabinet approval. Contracts will be awarded competitively, favoring the company that offers the lowest bid.

India's power secretary, Alok Kumar, reaffirmed the nation's dedication to the energy transition while striving to cater to its population's energy security demands.

"A battery energy storage scheme is a step in this direction," he said.

Several prominent Indian companies, including Reliance Industries, Adani Power, and JSW Energy, have announced plans to establish large-scale battery plants.

Initially announced by Finance Minister Nirmala Sitharaman in her budget speech on February 1, this progressive proposal will soon be deliberated by the country's cabinet headed by Prime Minister Narendra Modi. The exact timeline for its approval remains undisclosed.

At present, India has a battery storage capacity of 37 MWh. However, its power sector planning body estimates that by 2031-32, an additional 236-gigawatt hours (GWh) of battery energy storage and 27 GW of pump storage projects will be required.

By Michael Kern for Oilprice.com

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