Green Energy Open Access Developers Want ISTS Charges Waived Beyond June 2025

The waiver of ISTS charges will end in June 2025


The waiver of interstate transmission system (ISTS) charges for projects commissioned by June 30, 2025, has enthused commercial and industrial (C&I) consumers to procure power from ISTS-connected solar projects.

In March this year, the Central Electricity Regulatory Commission (CERC) amended the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020, waiving ISTS charges for renewable energy and pumped hydroelectric projects beginning operations by June 30, 2025.

The waiver of these charges lowers costs for developers translating to attractive tariffs for businesses procuring power from ISTS-connected open access solar projects.

According to R Sunder, Business Head – C&I – India, South Asia at Hero Future Energies, “C&I consumers with high demand for round-the-clock (RTC) power consumption are increasingly showing a preference for procuring renewable energy from ISTS sources. This choice enables them to fully harness their potential to procure renewable energy by securing contracts with higher capacity utilization factor (CUF) at competitive tariffs.”

“Consequently, this encourages developers to invest in large-scale ISTS-connected renewable projects tailored for C&I consumers. Despite incurring additional ISTS losses compared to intrastate power sale contracts, developers can still achieve fair tariff realization for their projects,” he said.

Sunder said the average CUF could be 60% to 80% without energy storage. Based on these values, the potential savings are estimated to range between ₹0.45 (~$0.005)/kWh and ₹1.05 (~$0.013)/kWh approximately.

“It’s important to note that higher CUF values result in a lower per-unit impact of ISTS charges and, consequently, higher savings for the consumers.”

Implementation by states

While welcoming the ISTS charges waiver, some industry insiders raised the issue of implementation by the states and wanted the regulators to ensure settlements for individual customers.

Ramesh Naledath, COO at Orb Energy, said, “The ISTS waiver basically helps open access consumers. You can develop a project in one state and supply power to industries that have units in other states. It is a good initiative by the central government. But, electricity is a state subject, and each state should plan how they will adopt this power which comes through a central grid. The most crucial point is that the states should implement it. Now the state regulators should take this up and clarify how they will proceed with the settlement for individual customers.”

The Need for Waiver Extension

Open access project developers can seamlessly connect their projects to the ISTS network, enabling the distribution of power across multiple states.

Given the benefit of ISTS, stakeholders make a case for extending the waiver of ISTS charges to realize its full impact.

Most upcoming renewable energy substations are scheduled for commissioning beyond June 2025. “Unfortunately, there have been historical instances of delays in the commissioning of the Power Grid Corporation of India (PGCIL) substations, transmission lines, and common infrastructure due to construction delays, local right of way (RoW) challenges, and logistical issues. It is expected that similar delays might also occur in the upcoming renewable energy substations,” said Sunder.

“Solar module and wind turbine supply chain issues impact project construction timelines. These factors collectively leave little opportunity for developers to fully utilize the benefit of the waiver if it is not extended beyond 2025, he said.

Naledath, while optimistic about a two-year waiver extension, was worried about states putting a spoke in the wheel by increasing other charges. “C&I customers save up to ₹0.50 (~$0.006)/kWh-₹0.60 (~$0.007)/kWh as a result of the ISTS waiver. The most crucial point is how this benefit is passed on to end customers.”

Sunder felt the ISTS charges waiver does not fully address the challenges faced by developers. With the cut-off timeline of June 2025, there is a sense of urgency for all developers. “Those still looking for suitable land parcels and connectivity margins in resource-rich states will hope for an extension of the waiver.”

Manoj Gupta, VP-Renewable Energy Asia at Fortum India, concurred. He said the waiver should remain in force for another two years so that the waiver will apply wherever connectivity is granted to the developers.

He said there is a significant movement in the C&I segment for ISTS-connected projects, which will take a hit if the waiver is not extended.

While the impact of ISTS charge waivers on C&I projects is predominantly positive, there are still challenges, such as administrative complexities and regional variations in regulatory action, which the policymakers must urgently address.