Cabinet Approves Viability Fund to Boost Battery Energy Storage Systems: Understanding BESS and its Importance for India’s Renewable Energy Future
Introduction:
The Indian government has taken a significant step towards promoting renewable energy and strengthening its commitment to non-fossil fuel sources. The Union cabinet approved a viability gap funding scheme (VGF) aimed at encouraging the establishment of battery energy storage systems (BESS). With an allocated budget of Rs3,760 crore, the scheme aims to create 4,000 megawatt hours (MWh) of BESS capacity by 2030-31. This article will delve into the details of this scheme, the importance of BESS in the renewable energy sector, and the need for financial support.
Boosting Renewable Energy Integration:
The VGF scheme for BESS is expected to enhance the integration of renewable energy into the electricity grid and optimize the utilization of transmission networks. By reducing the need for costly infrastructure upgrades, the scheme aims to make renewable energy a more viable and sustainable option. Anish Mandal, partner at Deloitte India, highlights the significance of the scheme in mobilizing the first wave of BESS projects and enabling larger renewable energy installations.
Leveling Peak Power Demand:
The VGF support aims to achieve a levelized cost of storage of Rs5.50-6.60 per unit. This cost optimization will make stored renewable energy a viable solution for managing peak power demand. The scheme ensures that a minimum of 85% of the BESS project capacity will be made available to power distribution companies. Such availability of stored renewable energy will contribute to a more stable and reliable electricity grid.
Implementation and Selection Process:
The viability gap funds will be released in five tranches until 2030-31, providing financial support for project developers. These developers will be selected through a competitive bidding process, ensuring transparency and efficiency in the selection of the most capable entities to implement BESS projects.
Importance of Energy Storage:
Energy storage, such as battery energy storage systems, plays a crucial role in managing the demand mismatch between power generation and consumption. With intermittent generation from renewable sources like solar power, energy storage becomes essential during periods of low generation. Traditional power sources, such as coal-based and hydro-based power, have limitations in quickly ramping up to fill the demand gap, which can lead to grid instability. Energy storage provides a solution to meet this mismatch with stored renewable energy.
Storage Options and Financial Support:
While various energy storage technologies exist, battery storage, particularly lithium-ion batteries, are currently the most cost-effective and efficient option. However, the high cost of battery energy storage remains a challenge. The BESS sector requires financial support to add capacities and make it more economically viable for widespread adoption.
Conclusion:
With the approval of the viability gap funding scheme, India is set to boost the development of battery energy storage systems, a crucial component of the country’s renewable energy future. By integrating renewable energy, managing peak power demand, and addressing grid instability, BESS will play a pivotal role in achieving the government’s goal of 50% non-fossil fuel share by 2030. Continued financial support and the exploration of various storage options will drive the growth of the BESS sector, ensuring a resilient and sustainable energy landscape in India.
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