**Executive Summary**
The Ministry of New and Renewable Energy (MNRE) has implemented several proactive measures to facilitate Power Purchase Agreement (PPA) signing and to scale up energy storage capacity in the country. This follows a report from the Central Electricity Authority estimating the required energy storage capacity by 2029-30. Key initiatives include guidelines, waivers, funding schemes, and research programs.
**Key Points / Main Content**
* **Energy Storage Estimates:**
* The Central Electricity Authority estimates that 60.63 GW of energy storage capacity will be required by 2029-30, including 18.98 GW from Pumped Storage Projects (PSP) and 41.65 GW from Battery Energy Storage Systems (BESS).
* **Regulatory Framework:**
* Guidelines have been notified for the procurement and utilization of BESS.
* A National Framework has been issued to promote Energy Storage Systems.
* Guidelines have been issued to promote PSP.
* **Incentives and Waivers:**
* 100% waiver of Inter-State Transmission System (ISTS) charges for PSP construction awarded by June 30, 2028.
* 100% ISTS charges waiver for co-located BESS projects commissioned by June 30, 2028 (with conditions).
* **Funding and Investment:**
* A Viability Gap Funding (VGF) Scheme was approved in March 2024 for large-scale BESS development, with an outlay of ₹3,760 crore for 13220 MWh at VGF of Rs 27 lakhs/MWh.
* Another VGF scheme of 30 GWh was approved in June 2025, funded through ₹5,400 crore from the power system development fund (PSDF) at VGF of Rs 18 lakhs/MWh.
* ₹10 GWh capacity earmarked for Grid Scale Stationary Storage applications under the “National Programme on Advanced Chemistry Cell (ACC) Battery Storage".
* **Research and Development:**
* 'Advisory on co-locating Energy Storage Systems with Solar Power Projects' issued.
* The "Renewable Energy Research and Technology Development Programme" is being implemented.
* The Department of Science & Technology (DST) is funding R&D projects through the Clean Energy Material Initiative (CEMI).
* **Power Purchase Agreements (PPAs):**
* Four Renewable Energy Implementing Agencies (REIAs) have issued Letters of Award for around 69 GW capacity.
* Power Purchase Agreements (PPAs) have been signed for around 24.3 GW against these Letters of Award, as of 31.12.2025.
* Government urges States to comply with the Renewable Consumption Obligation, advises REIAs to aggregate demand from DISCOMs, and organizes regional workshops to accelerate PPA signing.
**Impact Analysis**
**Renewable Energy Implementing Agencies (REIAs) like SECI, NTPC, NHPC and SJVN**
* **Impact:** They are responsible for issuing tenders for solar/wind with energy storage. They are sensitised to move from plain RE tenders to tenders of solar/wind with Energy Storage, tenders with configuration to supply renewable power during peak hours and tenders with configuration to supply Firm and Dispatchable Renewable Energy (FDRE).
* **Action Required:** Aggregate demand from DISCOMs and other consumers before designing and issuing tenders.
**State Governments**
* **Impact:** Urged to comply with the Renewable Consumption Obligation under the Energy Conservation Act.
* **Action Required:** Comply with the Renewable Consumption Obligation under the Energy Conservation Act to help aggregate demand.
**Distribution Companies (DISCOMs) and End Procurers**
* **Impact:** Beneficiaries of declining cost of solar/wind plus storage and dispatchable renewable power.
* **Action Required:** Aggregate demand from DISCOMs and other consumers before designing and issuing tenders.
Key Entities Referenced
Ministry of New and Renewable Energy: The primary ministry implementing measures to scale up energy storage capacity.
Battery Energy Storage Systems (BESS): A key technology being promoted for energy storage.
Pumped Storage Projects (PSP): Another key technology being promoted for energy storage.
Viability Gap Funding (VGF) Scheme: Scheme to financially support the development of large-scale BESS.
Renewable Energy Research and Technology Development Programme: Programme to support research and development of indigenous renewable energy technologies.
Ministry of New and Renewable Energy
Government Takes Multi-Pronged Steps to Scale
Up Energy Storage Capacity in the Country
MNRE Implements Several Proactive Measures to Facilitate
PPA Signing
Posted On: 03 FEB 2026 1:31PM by PIB Delhi
The Central Electricity Authority in its report on “Optimal Generation Mix 2030” has estimated that the
required energy storage capacity by 2029-30 is 60.63 GW with 18.98 GW from Pumped Storage Projects
(PSP) and 41.65 GW from Battery Energy Storage Systems (BESS). The Government has taken following
major steps for development of the energy storage capacity in the country including support for domestic
research and manufacturing of storage technologies:
Notified Guidelines for Procurement and Utilization of BESS as part of Generation, Transmission and
Distribution assets, along with Ancillary Services.
Issued National Framework to promote Energy Storage Systems in the country.
Issued Guidelines to promote PSP.
Granted 100% waiver of Inter-State Transmission System (ISTS
charges for PSP for which construction work is awarded on or before June 30, 2028
Granted 100% ISTS charges waiver for co-located BESS projects, commissioned on or before 30th June
2028, with certain conditions.
In March 2024, government has approved a Viability Gap Funding (VGF) Scheme for the development of
large-scale BESS, with an outlay of ₹3,760 crore for development of 13220 MWh at VGF of Rs 27
lakhs/MWh.
In June 2025 the Government has approved another VGF scheme of 30 GWh, funded through ₹5,400
crore from the power system development fund (PSDF) at VGF of Rs 18 lakhs/MWh.
Earmarked 10 GWh capacity for Grid Scale Stationary Storage applications under the “National
Programme on Advanced Chemistry Cell (ACC) Battery Storage".
Issued an ‘Advisory on co-locating Energy Storage Systems with Solar Power Projects to enhance grid
stability and cost efficiency’.
Implementing a “Renewable Energy Research and Technology Development Programme” to support
various research institutions and industries to develop indigenous technologies and manufacturing for
widespread applications of new and renewable energy including storage technologies in cost-effective
manner.
Department of Science & Technology (DST), under the Clean Energy Material Initiative (CEMI), is also
funding R&D projects in the area of energy storage materials and devices
As on 31.12.2025, four Renewable Energy Implementing Agencies (REIAs), namely SECI, NTPC, NHPC
and SJVN have issued Letters of Award of around 69 GW capacity and Power Purchase Agreements have
been signed for around 24.3 GW against these Letters of Award.States are also issuing renewable power procurement tenders and renewable power capacity is also being
added in commercial and industrial sectors through Green Energy Open Access/Captive route. Thus,
capacity addition of renewable energy is progressing through multiple pathways and not only through
REIA led bids.
With the declining cost of solar/wind plus storage and dispatchable renewable power, there is a growing
preference among distribution companies and end procurers for such solutions. This shift has been
accompanied by a reduced demand for plain solar/wind power. Accordingly, the Government has
sensitized the REIAs to move from plain RE tenders to tenders of solar/wind with Energy Storage, tenders
with configuration to supply renewable power during peak hours and tenders with configuration to supply
Firm and Dispatchable Renewable Energy (FDRE).
To facilitate signing of Power Purchase Agreements (PPAs) in respect of bids issued by REIAs, the
Government has undertaken several proactive measures, including urging States to comply with the
Renewable Consumption Obligation under the Energy Conservation Act, and advising REIAs to aggregate
demand from DISCOMs and other consumers before designing and issuing tenders. Regional workshops
have been organized with major renewable energy-procuring States to address implementation challenges
and accelerate PPA signing.
This information was submitted by Union Minister of State for New and Renewable Energy Shri Shripad
Yesso Naik in a written reply in Rajya Sabha.
****
Navin Sreejith
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