Power Min waives inter-state transmission charges for new hydro projects

The Power Ministry on Friday announced a waiver of inter-state transmission charges on wheeling electricity for 18 years for new hydropower projects.

The waiver is already available to solar and wind power projects. The government has set an ambitious plan to have 500 GW of generation capacity from non-fossil energy-based sources by 2030.

"In a further step to realise the Government of India's commitment to achieve its power requirement from renewable energy sources, Ministry of Power has issued an order for the waiver of Inter-State Transmission system (ISTS) charges on transmission of electricity generated from new hydro-power projects," a power ministry release said.

Hydropower projects, being clean, green and sustainable will be of paramount importance in our clean energy transition journey. They are also essential for the integration of solar and wind power, which are intermittent in nature, the ministry said.

In acknowledgement of the inherent qualities of hydro-power, the government declared hydropower projects as a renewable source of power in March 2019.

However, the waiver of inter-state transmission charges, provided to solar and wind projects, had not been extended to hydropower projects.

To remove this discrepancy and to provide a level-playing field to hydro projects, the Ministry of Power has now decided to extend the waiver of ISTS charges for new hydropower projects, for which construction work is awarded and PPA (power purchase agreement) is signed on or before June 30, 2025.

The ISTS charges shall be levied for transmission of power from hydro-power projects where construction work is awarded and PPA is signed after June 30, 2025.

For the hydropower project whose construction work is awarded and PPA is signed between July 1, 2025, to June 30, 2026, 25 per cent of ISTS charges will be applicable.

For a project whose construction work is awarded and PPA is signed between July 1, 2026, to June 30, 2027, 50 per cent of ISTS charges will be applicable while for projects whose construction work is awarded and PPA is signed between July 1, 2027, to June 30, 2028, 75 per cent of ISTS charges will be applicable.

As much as 100 per cent ISTS charges will be applicable for hydro projects from July 1, 2028.

The waiver/or concessional charges shall be applicable for a period of 18 years from the date of commissioning of the hydropower plants.

The waiver shall be allowed for inter-state transmission charges only and not losses. The waiver would be made applicable from the prospective date.

This step is expected to provide a boost to the hydro sector, which will also help improve India's water security and bring development benefits to hilly states namely North Eastern States, Uttarakhand, Jammu and Kashmir, Himachal Pradesh etc. where most of the hydro potential is located, it stated.