The Ministry of Power (MoP) has issued an order to waive off inter-state transmission system (ISTS) charges on transmission of electricity generated from new hydroelectric projects (HEPs) for 18 years from the date of commissioning. ISTS charges will be levied for transmission of power from HEPs where construction work is awarded and power purchase agreement (PPA) is signed after June 6, 2025 as per the following trajectory:
The waiver/or concessional charges as shown in table above will be applicable for a period of 18 years from the date of commissioning of the hydro power plants. The waiver will be allowed for ISTS charges only and not losses. The waiver would be made applicable from prospective date.
In a further step to realise the Government of India’s commitment to achieve its power requirement from renewable energy sources, the MoP has issued an order for the waiver of ISTS charges on transmission of electricity generated from new HEPs. The waiver off is already available to solar and wind power projects.
The government has set an ambitious plan to install 500 GW of generation capacity from non-fossil energy-based sources by 2030. HEPs, being clean, green and sustainable will be of paramount importance in our clean energy transition journey. They are also essential for the integration of solar and wind power, which are intermittent in nature.
In acknowledgement of the aforesaid inherent qualities of hydro-power, the Government of India had declared HEPs as the renewable source of power in March 2019, However, waiver of inter-state transmission charges, provided to solar and wind projects had not been extended to HEPs.
In order to remove this discrepancy and to provide a level playing field to HEPs, the MoP has now decided to extend the waiver of ISTS charges on the transmission of power from new HEPs, for which construction work is awarded and power purchase agreement (PPA) is signed on or before June 30, 2025.
This step is expected to provide a boost to the hydro sector, which will also help improve India’s water security and bring development benefits to hilly states namely North Eastern States, Uttarakhand, Jammu and Kashmir, Himachal Pradesh etc. where most of the hydro potential is located.