The Union Power and New & Renewable Energy Minister has unveiled a significant policy shift aimed at bolstering the country’s distribution infrastructure and enhancing the role of Discoms. Under the new policy, a minimum of 85% of the electricity generated by BESS projects funded through the VGF scheme will be prioritized for purchase by Discoms. This initiative marks a crucial step towards integrating renewable energy sources more seamlessly into the grid and addressing challenges related to grid stability and peak demand.
The VGF scheme provides financial assistance to bridge the gap between the project cost and the revenue potential, making BESS projects more commercially viable. By prioritizing Discoms as the primary recipients of power from these projects, the government aims to:
- Strengthen Discoms: Equipping Discoms with access to reliable and flexible BESS power will enable them to manage peak demand more effectively, prevent outages, and improve overall grid stability.
- Promote renewable energy integration: BESS can store excess power generated from renewable sources like solar and wind, allowing Discoms to utilize it during peak hours when it is needed most. This will facilitate a greater penetration of renewables into the energy mix.
- Enhance grid resilience: BESS can act as a buffer during sudden fluctuations in power demand or supply, contributing to a more resilient and reliable grid infrastructure.
The policy also outlines a three-year window (2023-24 to 2025-26) for approving BESS projects under the VGF scheme. While the selection process for developers under the scheme is yet to commence, the prioritization of Discoms as power recipients is expected to attract significant interest from potential investors and developers in the BESS sector.