Solar federation to govt: Extend transmission waiver charges by a year

NSEFI has requested an ISTS charge waiver extension for renewable projects set to be commissioned by June 2026 to safeguard viability and meet clean energy targets

The National Solar Energy Federation of India (NSEFI) has — in a letter to the Prime Minister’s Office (PMO) — sought a year’s extension of the waiver on inter-state transmission system (ISTS) charges until June 2026 for projects that are to be commissioned within next year.

 

This is to protect the viability of various renewable energy projects that are at risk due to delays beyond the control of developers.

 

This waiver aims to promote the transition to renewable energy by lowering generation costs and assisting India in reaching its goal of 500 Gw of non-fossil fuel energy capacity by 2030.

 

Currently, the charges are waived for a period for solar, wind, and hybrid projects, as well as battery energy and pump storage projects. The Ministry of Power first notified the waiver of ISTS charges for such projects in 2016. This waiver was initially applicable to projects commissioned before a specific date, and has been extended multiple times since then. The latest extension puts the waiver in place until June 30, 2025. 

 

In a letter dated June 3, NSEFI, which represents stakeholders across the solar value chain, stated that while the ISTS waiver announced by the power ministry has been crucial in making renewable power more competitive, its delayed implementation by the Central Electricity Regulatory Commission in February 2023 has left many developers in uncertainty. 

 

The current ISTS waiver helps renewable energy developers avoid charges ranging from ₹0.4 to ₹1.8 per unit for transporting electricity from producing states to consumer centres.

 

According to sources, this amount constitutes a significant portion of the total tariff.

 

If the ISTS waiver is not extended, there will likely be a substantial increase in tariffs. This will make power generation from renewable sources less competitive compared to other sources like coal.

 

This situation will also lead to higher procurement costs for electricity distribution companies. Industry players expressed concern that many Letters of Award (LoAs) would not convert into Power Purchase Agreements (PPAs) if the waiver is rescinded in June 2025.

 

On the other hand, the cost of extending the waiver is minimal compared to the potential benefits. It would enable distribution companies (discoms) to finalise the pending 40 Gw of PPAs, allowing them to save between 60 and 90 paise per unit.

 

Moreover, the industries would be encouraged to decarbonise and pursue renewable energy projects, aiding the country to achieve its 500 Gw mission.