India Extends Waiver On Transmission Charges For Renewable Power By Two Years
Aerial view of a solar panels on a commercial power farm. (Photographer: Alejandro Cegarra/Bloomberg)

India Extends Waiver On Transmission Charges For Renewable Power By Two Years

The Power Ministry has extended the waiver on inter-state transmission charges for renewable power by two years as part of its measures to boost green energy producers and curb dependence on fossil fuel-based power.

The waiver, the ministry said in a statement, will apply till June 30, 2025, to not only solar and wind energy, but also to battery storage and pump hydro projects. It was earlier applicable on solar and wind power from projects commissioned till June 30, 2023.

The ministry also waived inter-state transmission system charges for renewable energy traded on power exchanges till 2023. The exemption will be for clean energy traded under green term ahead and green day ahead markets.

The measure is expected to help meet balancing requirements of the electricity grid amid integration of around 450 gigawatts of energy from renewable sources by 2030, the ministry said. It also expects to boost renewable energy capacity that would help India meet international obligations towards climate change.

India’s installed renewable capacity stood at 97 GW as of February—well behind China, U.S. and Germany, according to data from ReNew Power. The Narendra Modi-led administration plans to raise it to 450 GW by 2030 as it seeks to curb fossil-fuel pollution—implying an annualised growth rate of more than 17%.

At present, India’s top ten pure-play renewable energy firms comprise 42% of India’s overall renewable energy capacity, according to ReNew Power.

The measure may not be enough as renewable energy costs are at the higher end of the cost curve compared to variable costs of thermal plants despite the waiver.

According to Rohit Natarajan, associate vice president of research at Antique Stock Broking, the effective cost of solar power is the sum of fixed charges for thermal power-purchase agreements, spot renewable energy tariffs and transmission costs. “As we see transmission cost is zero, but fixed charges for thermal PPA charges ranges from low to high, making switch to renewable energy not so easily attractive.”

Also read: Why Upcoming Renewable Project Auctions May See Higher Tariffs

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