Union power ministry to levy 100 per cent ISTS charges from July 2028

The Union power ministry has announced a 100 per cent inter-state transmission system (ISTS) charges on power supplied by solar and plants commissioned on or after July 1, 2028. Currently, distribution companies (discoms) are exempt from paying ISTS charges for solar and wind-generated electricity, and the exemption was utilised as an incentive to stimulate the construction of renewable power generation.

Initially, the waiver was only available for solar and wind projects that would be completed by March 21, 2022. The benefit was then extended until June 2023, and then again until June 30, 2025. The Union power ministry’s recent order has stated that electricity generated by renewable energy projects commissioned between July 1, 2025, and June 30, 2026 will be subject to 25 per cent of the appropriate ISTS rates. Electricity generated in the next one-year period will be subject to 50 per cent ISTS costs, whereas electricity generated by renewable energy plants between July 1, 2027, and June 30, 2028 will be subject to 75 per cent ISTS charges.

The government has also made it easier for hydro pumped storage plant (PSP) and battery energy storage system (BESS) projects to get ISTS charge waivers. Previously, these projects were only eligible for waiver benefits if at least 70 per cent of the electricity they utilised came from wind or solar power facilities. They can now qualify for the rewards if they get at least 51 per cent of their electricity from wind or solar installations. Solar, wind, and PSP projects will be exempt from ISTS transmission charges for 25 years after commissioning, whereas BESS projects would only be exempt for 12 years.

Green hydrogen plants that are operational by July 30, 2025, will be exempt from ISTS charges for the first eight years. Renewable energy-based electricity traded in spot power markets (green day-ahead and green term-ahead) will likewise be exempt from ISTS charges until July 30, 2025, according to the media reports.

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