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VGF for Battery Energy Storage



  Sep 09, 2023

Viability Gap Funding (VGF) for Battery Energy Storage


What is VGF for Battery Storage?

VGF is a grant provided to bridge the financial gap in commercially unviable but socially beneficial projects, particularly for battery storage.Viability Gap Funding (VGF) for battery storage is a financial mechanism introduced to make energy storage projects more economically viable. While many renewable energy projects, especially those based on solar and wind, have huge potential, they often face challenges due to the intermittent nature of their energy production. Batteries can store energy during peak production times and discharge it when production is low, ensuring consistent energy availability. However, the initial costs of implementing battery energy storage systems can be high. VGF steps in to bridge this financial gap, offering grants or subsidies to reduce the initial investment required, ensuring that such projects are both commercially attractive and feasible, while also supporting the broader goals of sustainable and consistent energy.
 

Why is VGF important?

It ensures battery storage projects, essential for green energy consistency, become financially feasible, compensating for the intermittent nature of renewable sources.
 

How is VGF disbursed?

It's provided in five tranches, linked with distinct project stages, from a total outlay of ₹9,400 crore, with a direct budgetary grant component of ₹3,700 crore.
 

What's the primary aim of VGF for battery storage?

The main objective is to reduce the overall cost of battery storage systems, thereby enhancing renewable energy integration into the grid.
 

Who benefits from this VGF?

Primarily, the renewable energy sector, especially solar and wind, benefit by ensuring round-the-clock energy delivery, making green energy a consistent and reliable power source.


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