Ministry of Power Waives ISTS Charges for New Hydropower Projects

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The Ministry of Power (MoP) has issued an order waiving the Inter-State Transmission System (ISTS) charges on evacuating electricity from new hydropower projects in the country.

To bring parity among solar, wind, and hydropower generation, the ministry has provided the same concession to the latter as is already available to the other two renewable sources.

It would be available to hydropower projects for which construction work is awarded and power purchase agreements (PPAs) are signed by June 30, 2025.

The waivers will be available for 18 years from the date of commissioning of the hydropower plants and apply to ISTS charges only, and not losses.

However, the exemption would be tapered progressively for projects that are commissioned later than the deadline.

The ministry said 25% of the ISTS charges would be applicable for the hydropower projects for which construction work is awarded and PPA is signed between July 1, 2025, and June 30, 2026.

It would be 50% for projects commissioned between July 1, 2026, and June 30, 2027, and 75% of the charges will apply to projects commissioned between July 1, 2027, and June 30, 2028.

The concession will cease for projects commissioned from July 1, 2028.

The ministry said India had set an ambitious target of 500 GW of generation capacity from non-fossil energy-based sources by 2030. Being clean, green, and sustainable, hydropower projects will be paramount in the country’s clean energy transition.

The ministry added that hydropower projects were also essential for integrating solar and wind power, which are intermittent in nature.

The ministry, in November 2021, announced that ISTS charges would be levied on renewable energy projects, including solar, wind, and pumped hydro storage, and projects with battery energy storage systems commissioned after June 30, 2025.

Even as the ministry broadened the scope for the waiver of ISTS charges, the growth of the open access market remained affected as the Central Electricity Regulatory Commission (CERC) is yet to include the provision in the Sharing of ISTS Charges and Losses (First Amendment) Regulations, 2022, thereby delaying its implementation.