In a recent order, the Union power ministry has said that the waiver on interstate transmission system (ISTS) charges for electricity generated through renewable energy sources would be phased out gradually, beginning June 30, 2025.
Renewable energy includes solar, wind, pumped storage hydropower and battery energy storage system (BESS) projects.
According to the order:
- 25 per cent of the applicable ISTS charges will be levied on projects commissioned between July 1, 2025 and June 30, 2026
- 50 per cent of the applicable ISTS charges will be levied on projects commissioned between July 1, 2026 and June 30, 2027
- 75 per cent of the applicable ISTS charges will be levied on projects commissioned between July 1, 2027 and June 30, 2028
- 100 per cent of the applicable ISTS charges will be levied on projects commissioned after July 1, 2028
The duration of the ISTS waiver, wherever applicable, will be 25 years for solar, wind and pumped storage projects. In the case of BESS, the duration would for 12 years. This duration is calculated from the time of commissioning of the project.
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Existing framework
The current order seeks to override that of June 2021 when the power ministry had extended the ISTS waiver (full exemption of ISTS charges) to projects commissioned up to June 30, 2025, as against the earlier deadline of June 30, 2023. Besides, the order also made battery energy storage systems (BESS) eligible for the waiver. For green hydrogen generating projects commissioned up to June 30, 2025, the waiver is applicable for eight years from the date of commissioning of projects. However, these green hydrogen projects should use solar and wind power to produce hydrogen to be exempted from ISTS charges. Even in the case of BESS projects, at least 51 per cent of the electricity used to charged the batteries should be from renewable energy sources, in order to avail the waiver.
