How centre is short-circuiting power sector reform

Recently, the power minister announced that inter-state transmission system (ISTS) charge may be waived for renewable generation projects (solar and wind) for at least another six months with effect from December 2022. This concession, introduced in 2016, is available to solar and wind projects set up through competitive bidding route that have power purchase agreements (PPAs) with entities for compliance with renewable purchase obligations (RPOs).

Of course, as the name suggests, the solar or wind generator has to be connected to an inter-state line (as opposed to an intra-state line), and all such projects get this benefit for a period of 25 years from their date of commissioning, with the cut-off date extended, as of now, to December 2022. The intention behind giving the additional six months’ time, was possibly to offset the effect of the current pandemic. The question is: Is such a waiver really an incentive to the renewable sector or to the consumers at large? We first have to see how ISTS charges are determined and apportioned amongst states.

ISTS charges are determined under the Point of Connection (POC) principle. The calculations are a bit complex, but, in layman’s terms, it can be said that payment will be based on the extent of usage of the transmission lines.

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