The purpose is to encourage renewable energy offtake from energy storage system projects and to facilitate the expansion of green hydrogen / green ammonia projects
The government has announced a significant decision to exempt ISTS charges for off-shore wind projects and to extend the concession to green hydrogen/green ammonia. This decision was made to assist the wider implementation of offshore wind energy initiatives, to support the extension of green hydrogen / green ammonia projects, and to stimulate renewable energy offtake from energy storage system projects.
According to a notification published by the Ministry of Power, off-shore wind power projects commissioned on or before December 31, 2032 will be exempt from ISTS (Inter-State Transmission Charges) for a period of 25 years from the date of commissioning.
Off-shore projects commissioned after January 1, 2033 will be subject to graded ISTS costs. Previously, all wind energy projects were granted a waiver until June 30, 2025. Offshore wind would now be treated independently, with waivers provided up to December 31, 2032, followed by graded transmission charges.
The government has also granted a 25-year waiver of ISTS charges for Green Hydrogen/Green Ammonia production units that use Renewable Energy (commissioned after March 8, 2019), Pumped Storage Systems, or Battery Storage Systems, or any hybrid combination of these technologies. This waiver will apply to projects that begin construction on or before December 31, 2030. After December 31, 2030, projects will be subject to graduated transmission charges.
To encourage the construction of Pump Storage Plants (PSP), the criteria for obtaining a complete waiver of ISTS charges for PSP projects has now been connected to the date of award rather than the date of commissioning. This will apply in circumstances where building work is granted on or before June 30, 2025.
The ISTS charges on energy drawl from energy storage projects, which were formerly awarded to the project, will now be available to each individual user of such project. This benefit is available to the individual user if at least 51% of the energy used to charge the storage system is renewable energy. Previously, the project level limit of 51% was in effect. This amendment has been proposed in light of the fact that in the future, the capacity of such storage projects will be shared by many discoms / other users, and only some of them may meet the 51% individual criterion, while the same may not be met in aggregate at the storage project level.
Furthermore, if a project is eligible for transmission charge waiver based on its initial COD (Date of Commissioning), the same benefit will be extended if COD is extended by competent authority. This is deemed necessary to reassure investors who are making investment decisions based on current circumstances, but whose COD may stretch beyond the relevant applicable date for transmission charge waiver due to factors beyond their control.