Govt extends transmission charge waiver for solar and wind projects

To encourage renewable power projects, the government has allowed solar and wind-based generation plants to avail inter-state transmission (ISTS) charge waivers for units to be commissioned within June 30, 2025. The waiver was initially available for solar and wind projects scheduled for installation within March 21, 2022, and in August 2020, the benefit was extended till June 2023.

The move is seen to help about 50,890 MW of RE projects that are currently under various stages of implementation. At present, the current installed RE capacity in India is 95,660 MW, including 41,090 MW of solar and 39,440 MW of wind power plants.

Through its latest order on Monday, the Union power ministry said the “waiver of ISTS charges has also been allowed for hydro pumped storage plant (PSP) and battery energy storage system (BESS) projects to be commissioned up to June 30, 2025”. These projects will benefit from the waiver only if at least 70% of the electricity used by these systems are supplied from wind or solar power plants.

However, ISTS transmission charges shall be levied gradually for PSP and BESS projects, rising 25% incrementally every three years to reach 100% from the twelfth year onwards.

The government clarified that state-run transmission systems located in an intervening state, which is used to ferry inter-state renewable energy-based electricity, will also have to offer transmission charge waiver to the buyers of green energy. “The transmission charges of such intra-state transmission system shall be reimbursed by the central transmission utility,” the Union power ministry said. Transmission charges add about Rs 0.20-0.50 per unit to every unit of thermal power. ISTS charge waivers are recovered by transmission utilities through higher tariffs on conventional electricity paid by state-run power distribution companies.

To encourage RE trading on the power exchanges, ISTS charges have also been waived for trading electricity supplied from solar, wind, PSP and BESS projects in green term ahead market and green day-ahead market for two years till June 30, 2023. The policy of waiving this charge for RE was designed to make solar and wind more attractive for cash-strapped discoms.