Budget Support: Increase in VGF for BESS to facilitate the energy transition

India has made significant strides in its energy transition, achieving 50 percent of non-fossil electricity capacity five years ahead of its 2023 Nationally Determined Contribution target and adding 34.95 GW in 2025-26 alone. However, as renewable penetration increases, grid intergration has moved from a future consideration to a central challenge in the next phase of the transition.

The Union Budget  2026 -27 recognises this shift, moving beyond “vanilla ” wind and solar towards solutions that deliver power when needed. Anchored in resilient macroeconomic fundamentals, the energy transition is framed not only as a climate imperative but also as a driver of industrial growth and employment.

The budget’s message is clear: India’s energy transition has matured. The next phase is not only about more gigawatts; it is about delivering clean power that behaves like a system resource. The increase in storage VGF is a strong start. Whether it becomes a genuine turning point will depend on the follow-through, as well as better contracts, improved markets for flexibility, and a grid and distribution system capable of absorbing and paying for reliable clean energy.