India’s Ministry of Power has confirmed previously announced plans to waiver inter-state transmission charges and losses for both wind and solar projects won through competitive bidding.
The move, suggested 12 months ago, is aimed at maintinaing the progress of renewables as local grids become constrained by the increasing penetration of alternative sources of energy.
The ministry said it is waiving the charges and losses for solar projects commissioned by 30 June 2017 and for wind projects commissioned by 31 March 2019. Wind projects have yet to be awarded through competitive bidding, hence the later deadline.
Consultancy firm Mercom Capital Group said projects selling their power through the inter-state transmission system (ISTS) would benefit. Under the current trajectory, the spread of renewable power across India is uneven leading to the need for some developers in highly concentrated areas of renewables to sell power between states.
Ministry of New and Renewable Energy (MNRE) sources told Mercom that waiving the charges would reduce solar power tariffs by roughly 10% in various locations. It should also help to hasten the building of the major Green Energy Corridors plan, which will help transmission of renewables across the whole country.
Raj Prabhu, Mercom chief executive, said: “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. 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.”
The new policy affects power sold via the ISTS, but not power sold to local distribution companies (Discoms). Unfortunately, news of Discoms failing to prioritise solar and not purchasing solar power has surfaced of late, with energy minister Piyush Goyal even citing the issue last week. However, Mercom said that now projects have an option of selling power to the national grid without incurring transmission charges and losses.
From another perspective, buying renewable power through the ISTS will also help some states to achieve their Renewable Purchase Obligation (RPO).