Govt Tightens VGF Norms for BESS Projects; Mandates Indigenous EMS, Bans Refurbished Cells
The Ministry of Power has revised the guidelines for the second tranche of the VGF scheme for battery energy storage systems, mandating indigenous EMS software and prohibiting refurbished battery cells to ensure higher quality standards.
August 05, 2025. By Mrinmoy Dey
As per the revised guidelines, the project may be connected to Intra-State Transmission Systems (InSTS) or Inter-State Transmission Systems (ISTS). “The responsibility for arranging grid connectivity and land shall be as per the RfS document,” said the Ministry in a notification.
The Ministry further mandated that the application software of the energy management system (EMS) of the BESS must be developed indigenously in India.
It has further called for ensuring that the BESS installed is of requisite quality as per best industry practices. “Refurbished battery cells are not allowed in projects,” clarified the notification.
In June 2025, the Ministry of Power approved the second tranche of the Viability Gap Funding (VGF) scheme with financial support of INR 5,400 crore to support the development of 30 GWh of Battery Energy Storage System (BESS) capacity across 15 states and NTPC. The scheme offers VGF at INR 18 lakh/MWh and aims to enhance the integration of renewable energy into the grid while supporting a reliable and flexible electricity supply.
Of the total 30 GWh capacity, 25 GWh has been earmarked for 15 states and 5 GWh for NTPC. Key allocations include 4,000 MWh each to Rajasthan, Gujarat, and Maharashtra; 2,000 MWh each to Karnataka and Andhra Pradesh; and 1,500 MWh to Tamil Nadu, Madhya Pradesh, Telangana, and Uttar Pradesh. Smaller allocations of 500 MWh have been made to Haryana, Kerala, Punjab, Chhattisgarh, Odisha, and Uttarakhand.
According to the Central Electricity Authority (CEA), India will require 37 GWh of BESS by 2027 and 236 GWh by 2031-32. While 13.2 GWh has already been approved under the first tranche of the VGF scheme, the second tranche of VGF aims to significantly boosts the country’s battery storage capacity.
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