New Delhi, Apr 3 (PTI) No amount was released under the Viability Gap Funding (VGF) Scheme for Battery Energy Storage Systems in FY25 as none of the projects achieved financial closure, Parliament was informed on Thursday.

In September 2023, the Union Cabinet approved the Viability Gap Funding (VGF) Scheme for Battery Energy Storage Systems (BESS) to support the development of BESS.

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"As per scheme guidelines, 10 per cent of VGF is to be disbursed after financial closure. Since none of the projects could achieve financial closure, no expenditure was incurred under the scheme during 2024-25," Minister of State for Power Shripad Naik said in a reply to Lok Sabha.

He also said a budgetary provision of Rs 96 crore was made for 1,000 MWh (mega watt hour) BESS in 2024-25, assuming 10 per cent disbursement upon financial closure.

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However, with falling BESS costs, the VGF amount reduced from Rs 96 lakh per MWh (estimated in 2023-24) to Rs 46 lakh per MWh or 30 per cent of capital cost, whichever is lower.

As a result, the budgetary allocation was revised from Rs 96 crore to Rs 46 crore.

Fund disbursement under the VGF scheme occurs in five tranches -- 10 per cent upon financial closure of the project, 45 per cent upon achieving the commercial operation date (COD), and 15 per cent per year over the next three years from the COD.

With the decline in battery prices, the scheme capacity has been increased from 4,000 MWh to 13,200 MWh while staying within the approved budgetary allocation of Rs 3,760 crore.

Central Electricity Authority (CEA) is responsible for monitoring the scheme, while the Ministry of Power oversees the scheme, to ensure timely completion and efficient fund utilisation.

The National Electricity Plan 2023 estimates that 236 GWh BESS would be required by 2031-32.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)