No transmission charge waiver for green power projects from July 2028

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November 25, 2021 4:00 AM

Power from projects commissioned in the next one-year period will be liable to pay 50% ISTS charges, and electricity from renewable energy plants coming online between July 1, 2027 and June 30, 2028 will attract 75% ISTS charges.

Currently power distribution companies (discoms) do not have to pay ISTS charges for solar and wind-based electricity, and the waiver was used as an incentive to encourage renewable power capacity addition.

In a move that can be seen to expedite the installation of renewable energy projects in the next few years, the Union power ministry has said that 100% inter-state transmission (ISTS) charge will be levied on power supplied by solar and plants commissioned on and after July 1, 2028. Currently power distribution companies (discoms) do not have to pay ISTS charges for solar and wind-based electricity, and the waiver was used as an incentive to encourage renewable power capacity addition.

The waiver was initially available for solar and wind projects scheduled for installation within March 21, 2022. Subsequently, the benefit was extended till June 2023, and further to June 30, 2025. Through its latest order, the Union power ministry said that electricity from renewable energy projects commissioned between July 1, 2025 and June 30, 2026 will attract 25% of applicable ISTS charges. Power from projects commissioned in the next one-year period will be liable to pay 50% ISTS charges, and electricity from renewable energy plants coming online between July 1, 2027 and June 30, 2028 will attract 75% ISTS charges.

The government has also relaxed the norms for availing ISTS charge waivers for hydro pumped storage plant (PSP) and battery energy storage system (BESS) projects. Earlier, these projects were eligible for waiver benefits only if at least 70% of the electricity used by these systems are supplied from wind or solar power plants. Now, they can get the benefits even if they source if at least 51% of the electricity from wind or solar projects. ISTS transmission charges shall be waived for solar, wind and PSP projects for 25 years from their commissioning, while BESS projects can avail the waiver for 12 years only.

Green hydrogen plants, commissioned within July 30 2025, will also receive ISTS charge waivers for the first eight years of their operation. Renewable energy-based electricity being traded in the spot power markets (green day-ahead and green term-ahead) will also be entitled to ISTS charge waiver till July 30, 2025, the latest order, seen by FE, stated. ISTS charges add about Rs 0.20-0.50 per unit to every unit of thermal power. However, ISTS charge waivers are recovered by transmission utilities through higher tariffs on conventional electricity paid by discoms.

In the beginning of the COP26 summit, along with the 2070 ‘net-zero’ target, Prime Minister Narendra Modi had announced that the country will install 500 GW of renewable energy capacity by 2030. India’s current RE capacity is 103 GW; another 50 GW capacity is under implementation and projects entailing combined capacity of 32 GW are in various stages of bidding.

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