The Union Cabinet has sanctioned a Viability Gap Funding (VGF) Scheme to facilitate the development of Battery Energy Storage Systems (BESS). BESS enables the storage and controlled release of renewable energy, reducing wastage and optimizing grid usage. The government will offer up to 40% of the capital cost as VGF, making BESS economically viable. A minimum of 85% of project capacity will be allocated to Distribution Companies (Discoms). The scheme’s goal is to establish 4,000 megawatt hours of BESS by 2030-31, aiming for a competitive Levelized Cost of Storage (LCoS) of Rs. 5.50-6.60 per kilowatt-hour. This move promotes clean energy and aligns with sustainability objectives.
Facts/Terms for UPSC Prelims
- Viability Gap Funding (VGF): A financial mechanism employed by governments to bridge the economic viability gap in infrastructure projects, particularly in cases where private investment is insufficient due to various factors like high capital costs.
- Battery Energy Storage Systems (BESS): Devices that store renewable energy, such as solar and wind power, for later use, aiding in grid stability and energy optimization.
- Levelized Cost of Storage (LCoS): The average cost of storing one kilowatt-hour (kWh) of energy over a specified period, in this context, aimed to be between Rs. 5.50-6.60 per kWh for BESS projects.
- Distribution Companies (Discoms): Entities responsible for the distribution of electricity to end consumers, often working closely with power generation and transmission companies.
- Sustainability Goals: Global objectives to promote clean and green energy solutions, reduce carbon emissions, and mitigate climate change impacts, as aligned with the United Nations Sustainable Development Goals (SDGs).