The Power Ministry announced that new hydropower projects will be exempt from inter-state transmission charges for the next 18 years. Solar and wind power projects are already eligible for the waiver. The government has set an ambitious target of 500 GW of non-fossil energy generation capacity by 2030.
“In a further step to realise the Government of India’s commitment to achieve its power requirement from renewable energy sources, Ministry of Power has issued an order for the waiver of Inter-State Transmission system (ISTS) charges on transmission of electricity generated from new hydro-power projects,” a power ministry release said.
Hydropower projects – Critical in Clean Energy Transition
Hydropower projects that are clean, green, and sustainable will be critical in our clean energy transition. They are also necessary for the integration of intermittent solar and wind power, according to the ministry. In recognition of hydropower’s inherent qualities, the government designated hydropower projects as a renewable source of energy in March 2019.
The waiver of interstate transmission charges, which had been extended to solar and wind projects, had not been extended to hydropower projects. To address this disparity and level the playing field for hydro projects, the Ministry of Power has decided to extend the waiver of ISTS charges for new hydropower projects that award construction work and sign a PPA (power purchase agreement) on or before June 30, 2025.
25% of ISTS Charges Will Be Applicable
The ISTS charges will be levied for power transmission from hydropower projects where construction work has been awarded and a PPA has been signed after June 30, 2025. 25% of ISTS charges will be applicable to hydropower projects whose construction work is awarded and PPA is signed between July 1, 2025, and June 30, 2026.
For projects with construction work awarded and a PPA signed between July 1, 2026 and June 30, 2027, 50% of ISTS charges will apply, while 75% of ISTS charges will apply for projects with construction work awarded and a PPA signed between July 1, 2027 and June 30, 2028. From July 1, 2028, hydro projects will be subject to up to 100% ISTS charges. The waiver/concessional charges will be valid for 18 years from the date the hydropower plants are commissioned.
The waiver shall be granted only for interstate transmission charges and not for losses. The waiver would be effective as of the prospective date. This step is expected to boost the hydro sector, which will help improve India’s water security and bring development benefits to hilly states such as North Eastern States, Uttarakhand, Jammu and Kashmir, Himachal Pradesh, and others, where the majority of the hydro potential is located, according to the statement.
