The Indian government on July 1 put an end to a 100 percent waiver on inter-state transmission (ISTS) charges for solar and wind projects. The move, according to officials of the Ministry of New and Renewable Energy (MNRE), is aimed at ensuring renewable energy developers do not delay and commission their projects on time.
ISTS charges are fees that are charged by developers to discoms to transmit electricity from one state to another.
As per the government's policy, renewable energy developers who are able to complete their projects on or before June 30 next year (2026), will be offered a 75 percent waiver in ISTS charges instead of 100 percent for 25 years. Those who commission their projects by June 30, 2028 will be given a 25 percent waiver in ISTS charges for the same duration. However, projects which remain incomplete beyond June 20, 2028, will not be offered any waiver in ISTS charges.
To be sure, any renewable energy project which was completed by June 30 this year (2025) is being offered a 100 percent waiver in ISTS charges for 25 years. This provision is not going to be revoked for completed projects, MNRE officials told Moneycontrol.
The waiver of ISTS charges is crucial for India's renewable energy sector as it significantly reduces the cost of transmitting electricity across state lines, making renewable energy projects more financially viable and competitive. This waiver encourages the development of large-scale renewable energy projects, particularly solar and wind, by removing a major cost barrier. It also supports India's ambitious renewable energy targets by incentivizing the growth of the sector.
A section of the industry expressed concerns over the discontinuation of 100 percent waiver of ISTS charges for projects commissioned beyond June 30, 2025 stating that it could lead to increased tariffs of solar and wind power. However, MNRE officials said the industry is still being offered incentives.
"The stakeholders need to understand that the scheme of waiving off ISTS charges has not been discontinued. The waivers are being gradually phased out from 100 percent to 75 percent to 25 percent until June 2028. We cannot keep giving 100 percent waiver for an endless period of time. The industry has to ultimately stand on its own feet," a senior MNRE official said.
"Solar and wind projects have received support from the government for long, it is now time to boost other aspects of energy transition such as battery energy storage and pumped hydro for which we are now offering 100 percent ISTS waivers for 25 years," the official added.
The Indian government on June 10 announced a viability gap funding (VGF) worth Rs 5,400 crore for developing 30 gigawatt hour (GWh) of new battery energy storage systems (BESS) to ensure round-the-clock renewable energy capacities in the country.
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