Ministry of Power is aggressively pushing for setting up solar and wind power capacities complemented with battery energy storage systems (BESS) and pumped storage projects (PSPs).
The move is largely to ensure optimum utilisation of thermal power capacities and grid infrastructure. Besides, BESS and PSPs will help to provide reliable and economical electricity supply during non-solar hours.
Under this, the Ministry will float a tender for 30 gigawatt hour (GWh) BESS capacity in the next three months with a viability gap funding (VGF) of ₹5,400 crore at a rate of ₹18 lakh per MWh.
Besides, to make energy storage system (ESS) projects more viable the Ministry has decided to waive-off Inter-State Transmission Charges (ISTS) charges for BESS and PSP projects commissioned on or before June 30, 2028.
ESS push
At a media interaction on achievements of the government in the last 11 years, Power Minister Manohar Lal said that the Ministry has approved a VGF scheme for 30 GWh of BESS, in addition to the 13.2 GWh already underway. This ₹5,400 crore scheme aims to attract ₹33,000 crore investment, meeting India’s BESS requirement by 2028.
The waiver of ISTS charges for storage projects has been extended until June 30, 2028, benefitting PSPs awarded and BESS commissioned before this date. This extension is crucial for meeting India’s growing storage needs and optimising the utilisation of transmission lines, he added.
The Ministry said that ISTS charges waiver for Hydro PSP projects for which the construction work has been awarded on or before June 30, 2028 shall be 100 per cent.
The charges waiver for co-located BESS projects commissioned on or before June 30, 2028 shall be 100 per cent, if the power from such projects is consumed outside of the State, where the BESS project is commissioned, it added.
Transmission issues
The Power Minister said that the centre is working with the States, discoms and stakeholders to tackle the issues impacting expansion of the power evacuation infrastructure.
He pointed to the Centre’s latest move to increase the compensation for land used in laying transmission lines to ease the Right of Way (RoW) issues.
Compensation for the tower area has jumped from 85 per cent to 200 per cent of the land value, and for the RoW corridor from 15 per cent to 30 per cent, directly linking land value to market rates. Haryana and Delhi have already adopted the new guidelines issued on March 21, 2025.
To attract more private investment and ensure financial discipline, the Late Payment Surcharge (LPS) Rules have been expanded to include intra-State transmission systems. This crucial reform, previously applied only to inter-State transmission systems, aims to expand the Intra-State Transmission networks to absorb Renewable Electricity.
Standard bidding documents to procure inter-State transmission services through a tariff based competitive bidding (TBCB) process were amended on June 5, 2025 by incorporating insurance surety bond (ISB) and payment on order instruments (POI) as alternative security instruments.
On the lines of development power markets, India is set to revolutionize its power transmission with the rollout of ultra high voltage alternating current (UHV AC) transmission system.
Nine 1100 kV lines and ten substations have been identified for development by 2034, with testing facilities under development by the Central Power Research Institute. The investment in this project would be around ₹53,000 crore.