Cabinet approves Green Energy Corridor Phase-III scheme for Development of Intra-State Transmission System with Battery Energy Storage Systems

Note on the name: The headline calls this "Green Energy Corridor Phase-III". The Cabinet release names the scheme PM-DHARA (PM-Developing Harmonized and Accelerated Renewable-energy Access). The transmission part of the scheme is described as being "under GEC-III" [1].

1. At a Glance

• PM-DHARA is a Centre-supported scheme to strengthen the Intra-State Transmission System (InSTS) so that up to 135 GW of renewable energy (RE) can be carried out of generating areas. It also adds 50 GWh of Battery Energy Storage Systems (BESS) [1].
• It is the third phase of the Green Energy Corridor (GEC) line of schemes. InSTS GEC-II covered about 20 GW in 7 States, so this phase is far larger [1][2].
• It combines two things in one scheme: wires (transmission) and storage (batteries). Earlier, storage was supported separately through Viability Gap Funding (VGF) [1][6].
• Why aspirants should care: it links to GS-III (Energy infrastructure, Climate), GS-II (Centre-State fiscal federalism) and the 900 GW non-fossil by 2035 target [1].

2. Why in the News

• 30 Sep 2026: The Union Cabinet, chaired by the PM, approved PM-DHARA with a total outlay of Rs 1,86,405 crore and Central Financial Support of Rs 54,082 crore [1].

3. Background & Evolution

• Why the scheme exists: RE-rich States need intra-State lines to move RE power into the grid. The Centre gives Central Financial Assistance (CFA) to lower intra-State transmission charges and so keep power costs down [1][2].
• InSTS GEC Phase-I: implemented by 8 RE-rich States: Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu [3].
• InSTS GEC Phase-II (approved by the Cabinet Committee on Economic Affairs, CCEA) [2]:
• About 10,750 ckm of lines and about 27,500 MVA of substation capacity.
• Covers about 20 GW of RE in 7 States: Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan, Tamil Nadu, Uttar Pradesh.
• Cost Rs 12,031.33 crore, with CFA at 33% (Rs 3,970.34 crore).

• Period: FY 2021-22 to 2025-26.

• GEC Phase-II, Inter-State Transmission System (ISTS): the Cabinet approved a separate ISTS scheme for a 13 GW RE project in Ladakh [5].

• Progress across both InSTS phases: GEC covers 10 States in total. 9,856 ckm of lines and 24,300 MVA of substations, able to evacuate 24 GW of RE, have been commissioned [3].
• Storage track, run in parallel:
• 6 Sep 2023: Cabinet approved the VGF scheme for BESS [6].

• Two VGF schemes (Mar 2024 and Jun 2025) support about 43.8 GWh of BESS [6].

• 30 Sep 2026: PM-DHARA brings InSTS (GEC-III) and 50 GWh of BESS together in one scheme [1].

4. Core Static Facts

Key terms

• InSTS vs ISTS: InSTS means lines within a State, built by STUs. ISTS means lines between States. Ladakh GEC-II was an ISTS project [1][5].
• GW vs GWh: GW measures capacity (power). GWh measures storage (energy). The 135 GW figure is evacuation capacity; the 50 GWh figure is battery storage [1].

5. Multi-Dimensional Analysis

Economic

• The CFA offsets intra-State transmission charges, which lowers the landed cost of power for consumers [1].
• The scheme is expected to create employment in the power sector, manufacturing, construction, domestic BESS manufacturing, and long-term O&M and grid-management jobs [1].
• Rough scale comparison (derived): GEC-III InSTS costs about Rs 1,010 crore per GW evacuated, against about Rs 600 crore per GW under GEC-II [1][2].
• BESS costs are falling. The VGF benchmark dropped from Rs 96 lakh/MWh to Rs 46 lakh/MWh or 30% of capital cost, whichever is lower [6]. Lower costs make a 50 GWh target more realistic.

Environmental

• The release says the scheme reduces the carbon footprint and supports ecologically sustainable growth [1].
• Storage reduces curtailment, i.e. clean power being wasted because the grid cannot absorb it at peak solar hours [1].
• For comparison, PIB estimated that 4,000 MWh of BESS would cut emissions by about 1.3 MMT per year [7].

Scientific / Technological

• BESS gives the grid flexibility and helps meet non-solar-hour (evening peak) demand [1][6].
• It also addresses intermittency and congestion. Transmission and storage are planned together rather than separately [1].

Ethical / Governance (Federalism)

• The scheme is centrally funded but implemented by the States through their STUs. This is cooperative federalism in a sector where electricity is on the Concurrent List (general knowledge).
• Governance choice: TBCB for greenfield projects brings competitive discovery of tariffs. Cost-plus is kept for brownfield work, where competitive bidding is harder [1].

Administrative

• The pace of past phases is a warning. Across two phases and 10 States, about 24 GW has been commissioned [3]. PM-DHARA targets 135 GW by FY 2032-33 [1], so STU capacity is a real bottleneck.
• Monitoring precedent: for the VGF BESS scheme, the Central Electricity Authority (CEA) monitors and the Ministry of Power oversees [6]. The monitoring set-up for PM-DHARA has not been specified in the release [1].

6. Recent Developments (last 12-18 months)

• Jun 2025: Second VGF scheme for BESS launched. Together with the Mar 2024 scheme, it supports about 43.8 GWh [6].
• The first VGF scheme was expanded from 4,000 MWh to 13,200 MWh within the same Rs 3,760 crore budget, because battery prices fell [6].
• InSTS GEC Phase-II's scheduled window (FY 2021-22 to 2025-26) has ended [2]. 24 GW of evacuation capacity has been commissioned across GEC [3].
• 30 Sep 2026: Cabinet approved PM-DHARA (GEC-III InSTS + 50 GWh BESS) [1].

7. Prelims Hooks

• PM-DHARA was approved by the Union Cabinet on 30 September 2026 [1].
• Full form: PM-Developing Harmonized and Accelerated Renewable-energy Access [1].
• Nodal ministry for PM-DHARA: MNRE (not the Ministry of Power) [1].
• It enables evacuation of up to 135 GW of RE through intra-State transmission [1].
• It provides for 50 GWh of BESS, costing Rs 50,000 crore [1].
• Total outlay: Rs 1,86,405 crore. Central Financial Support: Rs 54,082 crore [1].
• InSTS component under GEC-III: Rs 1,36,378 crore [1].
• Completion target: FY 2032-33 [1].
• Greenfield projects use TBCB; brownfield projects use Cost Plus Basis [1].
• TSPs participate on a BOOM model; STUs are the overall implementing agency [1].
• Linked target: 900 GW non-fossil capacity by 2035 [1].
• InSTS GEC-II: about 20 GW, 7 States, CFA 33%, Rs 12,031.33 crore [2].
• InSTS GEC-I covered 8 States; both InSTS phases together cover 10 States [3].
• Cabinet approved VGF for BESS on 6 Sep 2023. It is monitored by CEA and overseen by the Ministry of Power [6].
• At least 85% of power from VGF-funded BESS must first be offered to DISCOMs [8].

8. Why the Wires Get Delayed, Not the Money

• Past phases show slow building, not a shortage of funds
• In 2024-25, only 58% of the planned transmission lines were actually built [11].
• MNRE also often fails to spend its own budget. In 2023-24 it spent 22% less than it was given [11].

• So the main problem is building the lines on the ground, not approving money for them.

• The same things keep causing delays

• The Standing Committee on Energy (2024) listed the reasons: right-of-way (RoW, the permission to take a line across someone's land), slow land acquisition, contract disputes, and lines being rerouted to protect endangered species or avoid coal-mining areas [12].
• It also pointed to late environment and forest clearances, and to arguments over RoW compensation [12].

• PM-DHARA's release does not say how any of these will be fixed [1].

• The target is about five times what has been achieved so far

• Across GEC-I and GEC-II, about 24 GW of evacuation capacity has been commissioned [3].
• PM-DHARA aims at up to 135 GW by FY 2032-33 [1].

• The same STUs that built the 24 GW now have to do far more, under the same RoW and clearance rules.

• This warning is not new

• An earlier Standing Committee said targets were missed partly because MNRE did not monitor closely and the project was not given priority [13].
• PM-DHARA's release does not say who will monitor the scheme [1]. So the gap the committee flagged is still open.

9. Who Pays the Remaining 71 Percent

• The Centre's share is smaller than in GEC-II
• Central Financial Support is Rs 54,082 crore out of Rs 1,86,405 crore, about 29% (derived) [1].
• Under InSTS GEC-II, CFA was 33% [2].

• Each GW is also more expensive: about Rs 1,010 crore per GW now, against about Rs 600 crore under GEC-II (derived) [1][2].

• The rest reaches the consumer's electricity bill

• STUs recover their costs through intra-State transmission charges. DISCOMs (distribution companies, which sell power to homes and farms) pay these charges.
• DISCOMs are still making losses. PRS links this to tariffs set below cost and high technical and commercial losses (T&C losses: power lost in the wires, or supplied but never billed or paid for) [11].

• If a loss-making DISCOM pays late, TBCB developers face more risk. They will then ask for a higher tariff.

• The benefit goes mainly to RE-rich States

• Earlier phases covered only 10 States [3].
• Central money for intra-State lines helps those States most. Other States gain only when the extra RE power reaches the national grid.

10. Why 50 GWh of Batteries Will Not End Curtailment

• Storage is small compared with the new capacity
• 50 GWh can supply 12.5 GW for four hours (derived, assuming 4-hour batteries) [1].
• That is a small fraction of the up to 135 GW of RE the lines are meant to carry [1].

• So on sunny afternoons, some solar power may still be wasted.

• Nobody publishes how much power is wasted

• NITI Aayog said RE generators can be curtailed (ordered to cut output) for grid-safety reasons, and that curtailment data is not transparent. This worries investors [14].

• Without public curtailment figures, no one can check whether PM-DHARA's batteries are placed where the waste actually happens.

• Batteries need a way to earn money

• NITI Aayog recommended a regulatory framework to pay storage for the services it gives the grid [14].

• VGF lowers the upfront cost [6]. But a battery also needs steady income over its life, for example by charging when power is cheap and selling when it is costly.

• The generation gap shows the real problem

• Solar and wind are 37% of installed capacity but produce only 13% of electricity [11].
• Much of that gap comes from solar and wind not running all the time. More lines alone do not fix it. The grid also needs flexibility (the ability to adjust supply and demand quickly).

11. What MNRE, CEA and the States Should Do Next

• States should adopt one common rule for RoW compensation
• The Standing Committee on Energy (2024) recommended uniform RoW compensation guidelines across States [12].

• When States pay landowners at different rates, disputes follow and lines get delayed.

• The Centre should set up one online portal for clearances

• The same Committee proposed a dedicated clearance portal and better coordination between authorities [12].

• PM-DHARA could make CFA payment depend on STUs using this portal.

• MNRE should name a monitoring body and publish progress

• For VGF-BESS, CEA monitors and the Ministry of Power oversees [6].

• PM-DHARA should also name who monitors it. This fixes the weak MNRE monitoring an earlier Standing Committee criticised [13].

• CERC and State regulators should publish curtailment data and pay storage properly

• NITI Aayog asked for open curtailment data and a framework to pay storage for its services [14].
• It also recommended time-of-use tariffs (power costs more at peak hours, less at off-peak hours) and running farm pumps during solar hours [14].
• Moving demand into the afternoon cuts waste at a lower cost than building extra batteries.

12. Anchors for Answers

• Data: Only 58% of targeted transmission lines were added in 2024-25 [11]
• Data: Solar and wind are 37% of installed capacity but only 13% of generation [11]
• Data: About 24 GW commissioned across GEC-I and GEC-II, against PM-DHARA's 135 GW target [3][1]
• Report/Committee: Standing Committee on Energy, 2024: RoW, land, clearances and route changes delay lines; recommends uniform RoW compensation and a clearance portal [12]
• Report/Committee: NITI Aayog, Renewables Integration in India, July 2021: open curtailment data, a framework to pay storage, time-of-use tariffs [14]
• Scheme: VGF for BESS (Ministry of Power, CEA monitors): the model for storage support and monitoring [6]
• Scheme: InSTS GEC-II: 33% CFA, against about 29% central support under PM-DHARA [2][1]

13. Mains Relevance

• GS-III: Infrastructure: Energy. Conservation, environmental degradation and climate change. Indian economy: investment models (TBCB, BOOM).
• GS-II: Government policies and interventions. Federal structure and fiscal transfers.
• Possible Mains questions: 1. "India's renewable energy challenge has shifted from generation to evacuation and storage." Examine this in the light of the Green Energy Corridor phases and PM-DHARA. (15 marks) 2. Discuss the role of Battery Energy Storage Systems in addressing intermittency and curtailment in India's power grid. What policy measures has the government taken? (10 marks) 3. Critically evaluate the mix of Tariff Based Competitive Bidding and cost-plus models in India's transmission sector with reference to recent schemes. (15 marks)

14. Related Topics to Study Next

• GEC-II ISTS (Ladakh 13 GW): the inter-State counterpart, with storage and HVDC components [5].
• VGF scheme for BESS: the earlier storage-support route, run by the Ministry of Power [6].
• Pumped Storage Projects: the other large-scale storage option besides batteries.
• National Electricity Plan (Transmission) / CEA: transmission planning towards 2032.
• India's updated NDC and Panchamrit: the climate targets that the 900 GW goal serves.
• Electricity (Amendment) Bill and Green Energy Open Access Rules: market access for RE.
• PLI for Advanced Chemistry Cell (ACC) batteries: domestic supply chain for BESS.
• Revamped Distribution Sector Scheme (RDSS): DISCOM health, which decides whether storage and RE get paid for.

15. Common Errors / Trap Areas

• Ministry: PM-DHARA and the GEC InSTS schemes are under MNRE. The BESS VGF scheme is overseen by the Ministry of Power, with CEA monitoring [1][6].
• InSTS vs ISTS: PM-DHARA and the InSTS GEC-I/II schemes are intra-State. The Ladakh 13 GW project is inter-State GEC-II [1][5].
• Units: 135 GW is transmission capacity; 50 GWh is battery storage. Do not swap them [1].
• Numbers:
• Total outlay (Rs 1,86,405 crore) is not the same as central support (Rs 54,082 crore) [1].
• GEC-II CFA was 33% [2]. The component-wise CFA share for PM-DHARA is not stated in the release.

• The two stated components add up to Rs 1,86,378 crore, Rs 27 crore short of the stated total [1]. Quote the official total.

• Target years: 900 GW is for 2035 [1]; the scheme completion target is FY 2032-33 [1].