India's push for round-the-clock clean power got a major boost on Wednesday, 4 November, when the Union Cabinet approved a Rs 14,500 crore Viability Gap Funding (VGF) scheme for energy storage. The scheme aims to build 92 GWh of new grid-scale energy storage capacity across the country between 2026-27 and 2030-31, and is expected to attract about Rs 97,600 crore of total investment.
Union Minister Ashwini Vaishnaw announced the decision at the post-Cabinet briefing in New Delhi. In simple terms, the government will help bridge the cost gap that makes big storage projects hard to finance, so that solar and wind power can be stored and used when the sun is down or the wind is still.
What is the energy storage VGF scheme?
Viability Gap Funding is a one-time government support that covers part of a project's capital cost. Without it, many storage projects would produce electricity at tariffs too high for power distribution companies to buy. With central support of Rs 14,500 crore, the government hopes developers can quote competitive tariffs and build faster.
The 92 GWh of new storage is a big jump. According to the official release, it equals about 170% of India's current grid-scale storage capacity. India is estimated to need around 411 GWh of grid-scale storage by 2031-32 to keep up with its renewable energy targets.
Key facts of the scheme
| Scheme | VGF for grid-scale energy storage systems |
| Approved on | 4 November 2026, Union Cabinet |
| Central support | Rs 14,500 crore |
| Total investment expected | About Rs 97,600 crore |
| Period | FY 2026-27 to FY 2030-31 |
| Pumped storage plants | 60 GWh |
| Battery energy storage (BESS) | 30 GWh |
| Emerging technologies | 2 GWh |
| Domestic content for BESS | Minimum 40% |
| Storage need by 2031-32 | About 411 GWh |
How the 92 GWh is split
Pumped storage: 60 GWh
The largest share goes to hydro pumped storage plants. Vaishnaw explained the idea simply: surplus solar power is used to pump water uphill, and the water is released downhill to generate electricity when it is needed. It works like a giant natural battery.
Battery storage: 30 GWh
Battery energy storage systems will get 30 GWh. These projects must use at least 40% domestic content, a condition meant to push local battery manufacturing and reduce dependence on imports.
New technologies: 2 GWh
A small 2 GWh window has been kept for alternative and emerging storage technologies. Vaishnaw mentioned ultra-capacitors as one example.
How projects will be awarded
Storage capacity will be allocated through tariff-based competitive bidding. Public and private sector power distribution companies are eligible for VGF support on battery and pumped storage projects, while projects using alternative technologies can be taken up by public or private entities. The scheme will be rolled out together with state governments, and Vaishnaw said care would be taken to spread projects across the country.
Why storage matters for your electricity
Vaishnaw noted that non-fossil sources now make up close to 52% of India's power generation. But solar plants produce nothing at night, so transmission lines built for them sit partly idle for hours. He gave the example of a solar evacuation line that is never fully used because of this gap. With storage, the same line can carry stored power after sunset, which means less money has to be spent on building extra transmission.
For ordinary consumers, the payoff is steadier power supply, fewer peak-hour shortages and, over time, less need for expensive coal or gas-based power during evening demand peaks. The government also says the scheme will strengthen long-term energy security and support the Atmanirbhar Bharat goal.
Other decisions from the same Cabinet meeting
- A Rs 2,814 crore capex support scheme for processing critical minerals such as lithium and nickel.
- Extension and strengthening of 850 fast-track special courts for rape and child abuse cases.
- A Rs 4,371 crore scheme to restructure the national statistical system.
What happens next
The next step is the bidding process. Detailed guidelines and bid timelines have not been announced yet, and capacity will be tendered in phases through FY31 in coordination with states. This scheme builds on an earlier battery storage VGF scheme approved in September 2023, but at 92 GWh it is far larger in scale and adds pumped storage to the mix.
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