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Solar federation to govt: Extend transmission waiver charges by a year
The National Solar Energy Federation of India (NSEFI) has written to the Prime Minister's Office (PMO), seeking an extension to the waiver on the Inter-State Transmission System (ISTS) charges for projects that are set to be commissioned within the next year, specifically until June, for those that have made significant progress.
This is to protect the viability of various renewable energy projects that are at risk due to delays beyond the control of developers.
The 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 of 25 years for green power projects, including solar, wind, and hybrid projects, as well as battery energy and pump storage projects that are commissioned before 30 June 2025.
In a letter dated 3 June, 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 ₹0.40 to ₹1.80 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, making power generated from renewable sources less competitive compared to other sources such as 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concern that many Letters of Award (LoAs) would not convert into Power Purchase Agreements (PPAs) if the waiver is rescinded in June 2025.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 to 90 paise per unit. Moreover, industries would be encouraged to decarbonise and pursue renewable energy projects, aiding the country in achieving its 500 GW mission.
According to official data, the annual transmission charges (without the waiver) amount to approximately ₹52,691 crore, while the total ISTS waiver is only around 7 per cent of this, equivalent to ₹3,602 crore.
India faces transmission constraints in its quest to meet renewable energy targets. Currently, only Madhya Pradesh is expected to have spare capacity in the future, while Rajasthan and Gujarat will not. States need to plan their renewable and other power procurements according to the resource adequacy framework.
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