ISTS Charges Waived for Offshore Wind, Green Hydrogen & Green Ammonia Projects
The waivers are applicable for 25 years from the project commissioning date
The Ministry of Power has waived inter-state transmission (ISTS) charges for offshore wind, green hydrogen, and green ammonia projects as a significant step to facilitate the implementation and expansion of these projects.
The waiver is only applicable for ISTS charges but not for ISTS losses. The charges will be waived for 25 years from the commissioning date of the projects.
The green hydrogen and ammonia projects covered under the new scope must utilize renewable energy sources for production.
The ISTS charges waiver was previously only applicable to renewable energy generating stations, including solar, wind, and pumped hydroelectric stations. It did not specify the inclusion of offshore wind, green hydrogen, and green ammonia projects.
Offshore Wind Power Projects
Per the amended regulations, offshore wind projects commissioned on or before December 31, 2032, either through power purchase agreements or on a merchant basis, will be exempted from ISTS charges for 25 years from the date of commissioning.
However, a specified trajectory for ISTS charges will apply to offshore wind power projects commissioned after December 31, 2032.
The trajectory for ISTS charges for offshore wind power projects is outlined as follows:
- January 1, 2030, to December 31, 2034: 25% of the applicable ISTS charges
- January 1, 2034, to December 31, 2035: 50% of the applicable ISTS charges
- January 1, 2035, to December 31, 2036: 75% of the applicable ISTS charges
- From January 1, 2037: 100% of the applicable ISTS charges
Green Hydrogen/Green Ammonia Projects
Green hydrogen and green ammonia projects commissioned on or before December 31, 2030, that utilize renewable energy from sources such as solar, wind, large hydro (commissioned after March 8, 2019), energy storage systems (e.g., pump storage projects or battery energy storage systems), or any hybrid combination of these technologies will be exempted from paying ISTS charges for 25 years from the date of commissioning.
The trajectory for ISTS charges for green hydrogen and green ammonia projects is outlined as follows:
- January 1, 2030, to December 31, 2031: 25% of the applicable ISTS charges
- January 1, 2032, to December 31, 2033: 50% of the applicable ISTS charges
- January 1, 2034, to December 31, 2035: 75% of the applicable ISTS charges
- From January 1, 2036: 100% of the applicable ISTS charges
Drawee entities such as green hydrogen or green ammonia projects and distribution companies that contract energy or capacity from an energy storage system (ESS) will be eligible for exemption from paying ISTS charges if they draw a minimum of 51% of their annual contracted or consumed energy from the ESS as renewable energy.
In August 2020, the Ministry announced the ISTS charges and losses waiver for all solar and wind projects commissioned before June 30, 2023. Later in June 2021, The Ministry extended the ISTS charges waiver on solar and wind energy projects commissioned up to June 30, 2025. The waiver applied to ISTS charges only and not losses. In November 2021, the trajectory of ISTS charges for projects including solar, wind, and pumped hydro storage and projects with battery energy storage systems commissioned after June 30, 2025, until June 30, 2028, was released.
The waiver announced by the Ministry received a regulatory stamp when Central Electricity Regulatory Commission (CERC) recently amended the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020, and the ISTS waiver was among the various amendments in the regulations.
Last December, the Ministry issued an order waiving the ISTS charges on evacuating electricity from new hydropower projects in the country. This waiver is available to hydropower projects for which construction work is awarded, and power purchase agreements are signed by June 30, 2025.
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