The Ministry of Power has implemented significant amendments to the operational guidelines for the Viability Gap Funding Scheme for Battery Energy Storage Systems, communicated through a letter dated August 4, 2025, to Principal Secretaries of Energy across multiple states. The changes focus on promoting indigenous software development and ensuring high-quality standards for battery energy storage systems installed throughout the country.

Indigenous Software Development Requirements

The most significant amendment introduces a new clause numbered 3.9, which mandates that the application software for the Energy Management System of Battery Energy Storage Systems must be developed indigenously within India. This requirement represents a major step toward encouraging the use of homegrown technology in energy projects and promoting self-reliance in the vital energy sector.

The indigenous software mandate applies specifically to the Energy Management System application software, establishing a clear requirement for domestic technological development in this critical component of battery storage infrastructure.

Grid Connectivity and Land Responsibility Clarifications

The Ministry has revised clause 3.6 to provide clearer guidance on grid connectivity and land responsibilities. The updated clause specifies that projects can be connected to either the intra-state transmission system or the inter-state transmission system. However, the responsibility for arranging grid connectivity and land will be determined according to the provisions outlined in the Request for Selection document.

This clarification is designed to help project developers better understand their roles and duties, enabling more effective project planning. The amendment addresses potential confusion about connectivity options while maintaining flexibility in how projects can integrate with existing transmission infrastructure.

Quality Assurance and Material Standards

A new sub-clause has been added under Guideline 4, focusing specifically on quality assurance measures. This addition addresses concerns about the use of second-hand materials in battery energy storage projects. The clause clearly establishes that the Eligible Entity or the Renewable Energy Implementing Agency bears responsibility for ensuring that installed Battery Energy Storage Systems meet required quality standards.

The quality assurance provision explicitly prohibits the use of refurbished battery cells in any part of the project. This measure aims to protect the long-term performance and safety of energy storage systems being deployed across the country, ensuring that only new, high-quality components are utilized in these critical infrastructure projects.

State and Central Stakeholder Communication

The Ministry's letter was distributed to Principal Secretaries of Energy in fifteen key states: Rajasthan, Gujarat, Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Madhya Pradesh, Telangana, Uttar Pradesh, Haryana, Kerala, Punjab, Chhattisgarh, Odisha, and Uttarakhand. These states are expected to play major roles in the rollout of battery energy storage systems under the VGF scheme.

The communication extended beyond state officials to include several key stakeholders at the central level. Recipients included the Chairperson of the Central Electricity Authority, the Chairmen and Managing Directors of NTPC and Grid India, and senior officials within the Ministry of Power, specifically the Secretary and Additional Secretary.

The amendments reflect India's continued commitment to expanding renewable energy capacity through reliable and domestically supported battery storage systems. The emphasis on indigenous software development and quality assurance underlines the government's strategy to strengthen the country's energy infrastructure while simultaneously supporting the local technology ecosystem.

These changes to the VGF scheme guidelines establish clear parameters for battery energy storage system development, combining technological self-reliance objectives with stringent quality standards to ensure the effectiveness and safety of energy storage infrastructure deployment across participating states.