Solar industry seeks extension of interstate toll exemption

New Delhi: The National Solar Energy Federation of India (NSEFI) has requested the government to extend the waiver of Inter-State Transmission System (ISTS) charges for renewable energy projects to support India’s ambitious energy transformation goals.

Currently, the fees are waived for 25 years for green energy projects such as solar, wind and hybrid projects, as well as battery and pumped-storage projects, launched before June 30, 2025.

In a recent letter to the power ministry, NSEFI suggested that projects commissioned after June 2025 be considered for exemption.

“We have been continuously writing to the ministry in this regard for the last six months, seeking an extension of at least three years till 2028,” said Subrahmanyam Pulipaka, CEO, NSEFI Mint.

The solar energy authority expects the pace of installations to accelerate to bring about 80 GW of renewable energy (RE) on stream in the next three years. The exemption will be key to achieving the target of 500 GW of installed renewable energy capacity by 2030, Pulipaka added.

First introduced in 2010, the exemption has been amended and expanded several times. The scope of the exemption has been expanded to include new and emerging sectors such as green hydrogen, green ammonia projects and offshore wind projects, as well as hydropower projects.

Akshay Hiranandani, CEO of Serentica Renewables, said that the ISTS exemption is crucial for expanding renewable energy capacity as it reduces the cost of supplied energy, which translates into lower tariffs for the end user.

“Given that India is targeting 500 GW of renewable energy capacity by 2030 and we are still working towards achieving this figure, it is important that the exemption is extended for at least another two years,” Hiranandani added.

Current ISTS fee rates range from ₹$0.80-$1.20 per unit, which industry estimates is one-third of the rate for solar and one-quarter of the rate for hybrid (solar-wind) power.

Inquiries sent to the Ministry of Energy remained unanswered by the time of going to press.

In a statement, the solar development body said that while the government has set an ambitious target of 500 GW of renewable energy installations by 2030, factors like Covid have significantly delayed the timelines for commissioning transmission infrastructure. Other factors delaying projects include land acquisition, rights of way (RoW) and clearance issues.

It was also noted that in order to provide high capacity utilization factor (CUF) for hard-to-cut industries, hybrid wind-solar projects are being built, and the construction timeline for such hybrid or 24/7 renewable energy projects depends on the installed capacity and is spread over two to three years. Hard-to-cut industries are difficult to decarbonize because their greenhouse gas emissions can be difficult to reduce, for example sectors such as shipping and aviation.

According to NSEFI, the next six years will be critical to achieving India’s ambitious renewable energy target and this exemption will help ensure a steady pace of installations to achieve this goal.

It recommended that the ISTS exemption be extended to all renewable energy projects, including utility, hybrid, open access and green hydrogen projects.

The suggestions come at a time when progress in adding transmission capacity has been slower than expected. In the first two months (April-May) of this fiscal, India added 391 circuit-kilometres of transmission lines, compared with 1,004 circuit-kilometres in the same period last fiscal year (FY24), Central Electricity Authority data showed.

Moreover, despite the target of installing substations with a total capacity of 9,580 megavolt-amperes (MVA), only 6,225 MVA were installed.