Extend Renewable Energy Transmission Waiver to 2030: Power Producers

New Delhi, Feb 16 (PTI) Power producers have asked the government to keep the waiver on inter-state transmission charges for renewable energy until 2030 to help clean energy take root more deeply in India's economy.

A consultative meeting chaired by Minister for New and Renewable Energy Pralhad Joshi was held on February 5, where Wind Independent Power Producers Association (WIPPA) and other associations shared their concerns and suggestions.

A key demand from the players was to extend the waiver on inter-state transmission system (ISTS) charges, which is otherwise due to end on June 30 this year, sources aware of the matter said.

Renewable energy players requested MNRE to extend the ISTS waiver till 2030 to promote investments in the sector and aid India's ambitious energy transition goals.

Currently, charges are waived for 25 years for green power projects such as solar, wind, and hybrid projects, and battery energy and pump storage projects commissioned before June 30, 2025.

The current ISTS waiver helps renewable energy developers avoid Rs 0.4-1.8 per unit in charges that would have incurred on moving electricity from producing state to consumption centres. This, sources said, is a substantial chunk of the total tariff.

If ISTS waiver is not extended, it will lead to significant increase in tariff and make power generated from renewable sources uncompetitive vs other sources like coal, sources said adding this will also lead to an increase in procurement costs of electricity distribution companies.

Many LOAs (letter of awards) would not convert to power purchase agreements (PPAs) if the waiver is rescinded in June 2025, industry players felt.

On other hand, the cost of extending the waiver is nominal while the benefits are huge. It will help DISCOMs sign the pending 40 GW of PPAs as they would save 60-90 paise per unit.

Further, industries will be motivated to decarbonise and opt for renewable energy projects. Both will help the country move towards the 500 GW mission.

According to official data, transmission charges (without waiver) are approximately Rs 52,691 crore per year while the quantum of ISTS waiver is only around 7 per cent at Rs 3,602 crore.

For any extension of ISTS waiver, heads of both Ministry of New and Renewable Energy (MNRE) and Ministry of Power are expected to meet soon to decide on the future course of action, sources added.

India faces transmission constraints in its endeavour to meet renewable energy targets. Only Madhya Pradesh will have spare capacity in the future, while Rajasthan and Gujarat will not. States need to plan renewable and other power procurement as per the resource adequacy framework.

At the meeting, concerns were raised about delays in closing letters of award (LOA) with power purchase agreements (PPA), leading to developer liabilities. New guidelines will aim to close LOA with PPA within a year. Additionally, it was pointed out at the meeting that transmission charges for developers were reduced to address such delays.

There's a need to extend ISTS transmission charge waivers for renewable energy to keep distribution companies power procurement costs low. A phased reduction of these waivers could be considered to address the problem of socialisation of costs. However, this could lead to PPAs not materialising owing to increase in RE procurement cost, they said.