Cabinet Approves Rs.14,500 Crore Energy Storage Scheme: What It Means for Cleantech Founders

The Union Cabinet approved a Viability Gap Funding (VGF) scheme for grid-scale energy storage on 4 November 2026. Total financial support is Rs.14,500 crore for the period FY 2026-27 to FY 2030-31. It is not a startup grant. It is money that makes large storage projects pay for themselves, and the opportunity for startups sits around those projects.

What the scheme does

VGF is support that closes the gap between what a project costs and what it can earn, so that it becomes financially viable. Here it is aimed at storage capacity that is yet to be commissioned. The scheme aims to support the development of 92 GWh of it across the country.

The capacity is split three ways:

• 60 GWh of Hydro Pumped Storage Plant (PSP) capacity
• 30 GWh of Battery Energy Storage System (BESS) capacity
• 2 GWh through alternative energy storage technologies

The total estimated investment for these projects is Rs.97,600 crore. According to the government, the new capacity equals 170% of the grid-scale storage the country has today, and it helps meet a required grid-scale capacity of 411 GWh by 2031-32.

How capacity will be given out

Storage capacity will be allocated through a tariff-based competitive bidding process. In plain terms, developers compete, and the support attaches to projects that win.

Who is eligible, as stated in the official release:

• Public and private sector electricity distribution companies are eligible for VGF support for BESS and Hydro PSP projects.
• Projects based on alternative storage technologies will be implemented by public and private sector entities.

PSU Watch adds that the scheme is implemented with state governments.

The domestic content rule

This is the part founders in hardware should read twice. BESS projects will be subject to a minimum Domestic Content Requirement (DCR) of 40%.

The release says a key objective is to strengthen India's domestic energy storage manufacturing and reduce dependence on imported components. It says the requirement will create opportunities for Indian industry and complement existing supply-side incentives for battery manufacturing. In practice, a battery storage developer who wants this support will need Indian-made content, which creates demand for local component and equipment makers.

What was said at the briefing

PSU Watch reports that Information and Broadcasting Minister Ashwini Vaishnaw said, after the Cabinet meeting, that storage lets existing transmission capacity be used much more fully, and that a solar park is never fully utilised because solar energy does not come at night. He also said the 2 GWh set aside for emerging technology is there in case a new technology such as ultra-capacitor technology arrives, and that care will be taken to distribute the scheme across the country. Those are the minister's remarks as reported, not scheme rules.

Who stands to benefit

• Storage developers and distribution companies. They are the ones named as eligible for VGF support on battery and pumped storage projects.
• Equipment and component makers. The 40% domestic content requirement for BESS is designed to push developers toward Indian suppliers.
• Cleantech startups. Nothing in the announcement mentions startups. But if you build battery packs, power electronics, energy management software, grid analytics or a new storage technology, the buyers described above are your likely customers, and the 2 GWh alternative-technology slice is the part aimed at newer approaches. That is our reading, not something the government has said.

What has not been announced

Be careful here. The sources we reviewed say none of the following yet:

• How the Rs.14,500 crore is divided across pumped storage, batteries and alternative technologies
• The support amount per GWh, per project or per unit, and how it will be calculated
• Bidding timelines, tariff ceilings, selection criteria or the agency running the auctions
• Detailed qualification criteria for bidders, and whether private developers outside distribution companies can bid directly
• Which technologies count in the alternative category
• Whether the domestic content requirement applies beyond BESS projects, and how compliance will be checked
• Any official guidelines or notification

There is also no application, portal or form for startups. A startup cannot apply to this scheme directly on the basis of what has been announced.

What this means for you

• If you build storage hardware or components: read the 40% figure as a demand signal, but wait for the guidelines to learn what counts as domestic content before you promise anything to a buyer.
• If you build software or services for the grid: list the developers and distribution companies likely to bid, and start conversations now. Contracts will follow bids, and bids have no announced dates yet.
• If you work on a new storage technology: the 2 GWh alternative slice is small, and the sources do not say how projects will be chosen. Track the guidelines.
• If you are looking for a grant: this is not one. For direct funding for cleantech startups, check the programs on our site instead.

We will update this page when the guidelines are published.

Sources: Press Information Bureau (official release), Saur Energy, SolarQuarter and PSU Watch.

Cover photo: Sungrow EMEA on Unsplash