More than 21 GW of new solar and wind power projects have been implemented across the country between January and May 2025, and a huge capacity is expected to come online in June 2025 as well. This rush from renewable energy developers to complete their projects is primarily fuelled by the expected expiry of the waivers on interstate transmission system (ISTS) charges on June 30, 2025.
It is widely believed that these ISTS waivers have been a key driver of renewable energy deployment across the country since their introduction in 2016. These waivers have made solar and wind power procurement from resource-rich states attractive for utilities and bulk consumers in other states, by exempting these projects from various transmission charges for 25 years from the date of their commissioning.
Although extended multiple times over the years, no further ISTS waiver extensions are reportedly being granted for solar and wind projects, apart from a few select cases as decided by the government, much to the dismay of developers that have requested the ministry for another extension.
The application of ISTS charges will result in an obvious increase in renewable energy prices by as much as Rs 1.5 per unit, which could impact offtake prospects. However, a phase-wise implementation of ISTS charges is planned – a definite plus for the developers – beginning with 25 per cent charges levied on projects commissioned between July 1, 2025 and June 30, 2026, subsequently increasing by 25 per cent every year, with 100 per cent ISTS charges being levied from July 1, 2028 onwards.
Going forward, with the expiry of waivers on ISTS charges, there is going to be a definite focus on the improvement of state transmission infrastructure, encouraging local consumption of renewable energy within the state. Hopefully, this will enable more streamlined and “not skewed” development of renewable energy projects in the country.
