The Ministry of Power has announced
a waiver of inter-state transmission charges and losses for wind and solar
projects in a push to encourage the growth of renewable energy generation in
the country. The waiver of transmission charges was initially announced in the
revised tariff policy earlier in the year.
A notification released by the Ministry states that: “No inter-state transmission charges and losses will be levied for solar projects commissioned by June 30, 2017,” and “for wind projects,
the waiver will be applicable to projects commissioned by March 31, 2019.”
However, the waiver will only be
available to projects that have been awarded through competitive bidding. The
beneficiaries of the policy would be the solar and wind energy projects which
sell their power through the inter-state transmission system (ISTS). The waiver
will be available for 25 years, from the commissioning of the project.
“This policy is good news for
large-scale solar in the short-term. The Ministry of Power should take the next
step and extend the deadline by a few years to help solar projects get
developed in resource rich areas and spread solar power consumption across the
country,” said Raj Prabhu, CEO of Mercom Capital Group.
Ministry of New and Renewable Energy (MNRE) sources told Mercom that in
order to achieve 175 GW of renewable energy capacity by 2022, ultra-mega
projects and hybrid solar+wind projects have to be installed as renewable
energy potential is unevenly distributed across the country. Due to uneven
project concentration, project developers have had to pay for interstate
transmission charges. The waiver of interstate transmission charges will lessen
the overall project costs and attract more players into the renewable energy
sector. Due to the waiver, the solar power tariff could come down by approximately
10 percent in some cases.
The benefits of the policy apply
only if the generated power is sold through ISTS; the power sold to the local
state power distribution companies (DISCOMs) will not be included in this
program, according to Ministry of Power. Currently, some of the power produced
by the renewable energy projects is not being purchased by the
DISCOMs due to their poor financial conditions and the high price of renewable
energy. With this policy, projects now have an option of selling power to the
national grid without incurring transmission charges and losses.
The MNRE official also said that
the government does not want the pace of installation to slow down and this
policy will be an added incentive for developers. They went on to say that this
policy will also help states that don’t have a lot of renewable energy
potential to fulfil their Renewable Purchase Obligation (RPO).
Discussing the duration set for
projects that will benefit from this waiver, the MNRE official said that
this is the third policy of its kind in recent years. Initially in 2015, the
Central Electricity Regulatory Commission (CERC) had mandated that no transmission charges for the use of ISTS network will be
charged on solar based generation through the life of a project commissioned on
or after July 01, 2011 until June 30, 2014. Later the same year, CERC extended the date to June 30, 2017. The official said that the CERC
assesses the situation on a regular basis and new policy timeframes are set
accordingly. No wind projects commissioned so far are through competitive
bidding since reverse auctions for wind projects have been introduced just this
year, hence the timeframe has been extended until 2019.
“Low module prices along with the
transmission waiver could help some of the low bid solar projects become
workable if they are able to commission them by June of next year,” added
According to MNRE this policy will
spur a fast-paced and effective implementation of the Green
Energy Corridor project
undertaken by the Power Grid Corporation of India (PGCIL) to lay down
interstate transmission lines for renewable energy projects.