Swadeshi push: Government makes local content mandatory for battery storage

The Ministry of Power has added a new clause of a minimum 20% of local content of the total project cost in Battery Energy Storage System (BESS) procurements under the viability gap funding (VGF) scheme.

As a result, states and procuring entities must ensure they adhere to these norms, which indigenously developed Energy Management System (EMS) application software. The ministry had amended the VGF guideline in August mandating EMS software be made in India.

Under the public procurement order issued by DPIIT, certain items with adequate domestic manufacturing capacity and competition have been notified for purchase from Class I local suppliers. BESS has so far not been included in this list.

In cases where tenders have already been invited without any specific mention of local content, states may obtain an undertaking from the bidders to meet the requirement and proceed with the award of contract.

The second tranche of the VGF will be provided to support the development of 30GWh of BESS capacity. Of the proposed 30GWh, 25GWh of storage capacity has been allocated across 15 states to help them address their energy storage requirements. NTPC will develop the remaining 5GWh.

The move follows requests from several states seeking exemptions from the Public Procurement (Preference to Make in India) Order for implementing BESS capacity under the VGF scheme, supported through the Power System Development Fund (PSDF).

Renewable energy implementation agencies must also ensure that the BESS used in the projects meets the requisite quality standards based on the best practices in the industry. It strictly prohibits the use of refurbished battery cells in any projects.