A Battery Energy Storage System (BESS) is a technological concept and an integrated setup that functions as a large-scale rechargeable battery for the electricity grid. Its origin is rooted in solving the fundamental problem of intermittency in renewable energy sources like solar and wind. The BESS stores surplus electricity generated during the day and releases it during peak demand hours, particularly after sunset, which is critical for managing the grid phenomenon known as the "duck curve". This capability is essential for India to achieve its ambitious target of 500 GW of non-fossil fuel electricity capacity by 2030.
The system works by using Battery Modules (often Lithium-ion) to store Direct Current (DC) energy. A Power Conversion System (PCS) converts this DC power into Alternating Current (AC) for grid use, while a Battery Management System (BMS) and an Energy Management System (EMS) intelligently monitor and optimize the charge and discharge cycles.
BESS connects directly to India's power sector policy and is a key enabler for grid stability. The concept is closely linked to pumped hydro storage and the Energy Storage Obligation for distribution utilities. The policy landscape has changed significantly and recently, with the government introducing the Viability Gap Funding (VGF) scheme. This scheme, approved in two tranches in September 2023 and June 2025, provides financial support of over ₹9,100 crore to develop approximately 43.2 GWh of BESS capacity. Furthermore, a major incentive is the 100 percent waiver of Inter-State Transmission System (ISTS) charges for eligible projects commissioned by June 2028. The government also launched the Production-Linked Incentive (PLI) scheme in May 2021 with an outlay of ₹18,100 crore to boost domestic manufacturing of Advanced Chemistry Cell (ACC) batteries.