The four support mechanisms that matter
1. Viability Gap Funding (VGF). The central government’s flagship BESS support: grants covering up to 40% of capital cost for eligible standalone storage projects, disbursed in tranches linked to commissioning milestones. The scheme began with a 4,000 MWh pilot allocation and has since been expanded substantially across further tranches. Its effect is visible directly in tenders — VGF-supported standalone BESS bids have discovered capacity tariffs around ₹2.5 lakh/MW/month, versus ₹10+ lakh in the first 2022 auctions. Track current activity on our tender tracker.
2. ISTS charge waivers. Battery systems that charge from renewable energy have enjoyed waivers of inter-state transmission (ISTS) charges for projects commissioned within notified windows — a meaningful operating-cost saving for grid-scale storage co-located with, or contracted to, RE plants.
3. PLI for advanced cells. The Production Linked Incentive scheme for Advanced Chemistry Cells (~50 GWh of supported capacity) subsidises manufacturing, not projects — but it matters to buyers because domestic cell supply reduces import exposure and, over time, system prices.
4. State incentives. Several states layer their own support — electricity-duty exemptions, banking and wheeling concessions for storage-backed RE, land facilitation in renewable-energy parks, and storage mandates in solar tenders that create assured demand. The picture varies widely; see our state-wise policy guide.
What this means for your project
- Utility-scale / tender-bound: VGF eligibility is the single biggest determinant of your capacity-tariff competitiveness. Bid structuring around it is a core part of our tender support.
- C&I behind the meter: most central schemes target grid-scale projects — your economics rest on ToD arbitrage and demand charges rather than subsidy. The good news: at current system prices, many C&I cases now clear without any subsidy at all.
- Timing matters. Scheme windows, tranche allocations and waiver deadlines shift with notifications. Treat any summary — including this one — as a snapshot, and verify the current notification before financial close. We track these continuously for client projects.
Policy snapshot as of July 2026. Scheme terms change by notification; confirm current provisions with MoP/MNRE documents or ask us.