India: Gujarat proposes duty relief on battery storage in renewable energy projects
Key facts
- Gujarat proposes exempting renewable energy projects with battery storage from electricity duty and waiving transmission charges on discharged energy
- The Union Cabinet approved Rs 14,500 crore in Viability Gap Funding for 92 GWh of grid-scale energy storage, prioritizing made-in-India batteries
- Projects commissioned in Gujarat before June 30, 2029, must include two hours of storage capacity, while later projects require four hours
- New solar and hybrid renewable projects in Gujarat must integrate 25 percent of their capacity as storage, while onshore wind projects require 10 percent
- The proposed Gujarat Battery Energy Storage System Policy 2026 will be open for public comment this week before its official announcement
The Battery Energy Storage System (BESS) Policy proposes an exemption and a waiver of transmission charges.
The proposed Gujarat Battery Energy Storage System Policy 2026 could exempt renewable energy projects storing power in batteries from electricity duty. The state government has also proposed waiving transmission charges on discharged energy.
The Union Cabinet has approved Rs 14,500 crore in funding for grid-scale energy storage. Chief Minister Bhupendra Patel wrote about the decision on X. “The Union Cabinet, chaired by Hon’ble PM Shri @narendramodi ji, has approved Rs 14,500 crore Viability Gap Funding for 92 GWh of grid-scale energy storage, including battery and pumped storage, with a strong push for made-in-India batteries.” For Gujarat, a frontrunner in solar and wind energy, storage is the bridge between abundant green power and reliable round-the-clock supply.
A senior official told Mirror that two hours of storage capacity is mandated for projects commissioned on or before June 30, 2029. Four hours of storage would be mandated for projects commissioned after the deadline.
The proposed policy provides for standalone BESS integration at voltage levels of 11 kV and above, with a minimum project capacity of 1 MW and minimum storage of two hours.
For new solar and hybrid renewable energy projects, 25 per cent of project capacity has been mandated, while the requirement for new onshore wind projects is 10 per cent. The policy would be placed in the public domain this week for suggestions and objections before being announced after a fortnight.
Storing surplus power Renewable power is sometimes not scheduled or absorbed during peak generation hours because supply exceeds demand, the official said. This is common during the day, when solar generation is at its highest. “Renewable energy that cannot be absorbed by the grid when it is generated can be stored in batteries and supplied later,” the official said.
Demand and investment: Officials expect electricity requirements to rise as industries expand and new demand emerges from green hydrogen projects, electric mobility and data centres. Large-scale battery storage will be central to making this growing capacity available on demand beyond generation hours. The framework will cover technical, safety, cybersecurity, data protection and environmental standards. It will also encourage storage-based business models and investment in battery manufacturing and related industries, said the official. Gujarat has 55.51 GW of installed renewable energy capacity, the highest in the country.
Pvola take
This regulatory shift significantly lowers the operational cost barrier for developers integrating storage with renewable assets in Gujarat. By removing electricity duties and transmission charges, the policy directly improves project economics, making storage a more viable component for ensuring grid reliability. Developers should prioritize compliance with the mandated storage ratios to secure favorable terms under the upcoming policy framework.
Frequently asked questions
What duty and charge exemptions does the proposed Gujarat BESS Policy 2026 offer to renewable energy projects?
The policy proposes an exemption from electricity duty for renewable projects storing power in batteries. It also includes a waiver of transmission charges on the energy discharged from these storage systems.
What are the mandated storage capacity requirements for new solar and wind projects in Gujarat under the new policy?
New solar and hybrid renewable energy projects must mandate 25 percent of their capacity for storage. New onshore wind projects are required to integrate 10 percent of their capacity for battery storage.
How does the Union Cabinet's approval of Viability Gap Funding impact grid-scale energy storage development in India?
The Union Cabinet approved Rs 14,500 crore in Viability Gap Funding for 92 GWh of grid-scale energy storage. This funding supports the development of battery and pumped storage projects with a focus on made-in-India batteries.