Rajasthan has approved an order to reduce transmission charges by 50% for open access solar projects in the state.

The Rajasthan Electricity Regulatory Commission (RERC) passed the initiative in its ‘Transmission Tariff for FY 2015/16’.

Jasmeet Khurana, senior consulting manager at analyst firm Bridge to India, told PV Tech that Rajasthan has cheap non-cultivable land and enjoys high irradiation, making it ideal for solar power generation. It now has the highest installed capacity in the country, having overtaken the previous leader Gujarat earlier this year.

Nevertheless, Khurana said that while it makes sense to install solar in the state, it cannot absorb all the power generated, both in terms of the cost of solar power and the oft-cited Indian problem of grid balancing. Generating power in Rajasthan and selling it to other states then becomes a strong option.

Back in June, PV Tech reported that the Indian government was setting up green energy "corridors" to transmit clean energy from the country's leading renewable power states, such as Rajasthan, Gujarat and Madhya Pradesh to the main centres of energy consumption including Delhi and the state of Maharashtra.

Khurana added: “In that context, lowering of the transmission charges would make a lot of sense. Overall, this step is very welcome.”

Similarly, a spokesperson from ACME Cleantech Solutions, a renewable energy developer in India, which has commissioned 100MW of PV plants in Rajasthan under the National Solar Mission, told PV Tech: "We appreciate such a move and this is in favor solar power developers."

However, Khurana said the only long-term concern would be if the creation of infrastructure for evacuation of solar power was to suffer because of the lower charges.

He added: “For utility-scale solar to succeed, both the state and central governments in resource rich states should continue investing in such long term assets.”

In January this year, the Rajasthan Solar Association (RSA) approached RERC asking for relief from the high inter-state transmission charges for the solar projects in the state.

At the time, RSA general secretary Sunil Bansal told local reporters: "The reduction [in the inter-state transmission charges] will give a jump start to the state government's goal of 25GW of solar capacity."

In July, India’s Cabinet Committee on Economic Affairs, chaired by prime minister Narendra Modi, officially approved the construction of the intra-state transmission systems across seven states at an estimated cost of INR85.5 billion (US$1.35 billion).

The 'green energy corridors' were to run through Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra and Rajasthan.

The plans would involve 48 new grid sub-stations with total transformation capacity of around 17,100MVA, to be completed over the next three to five years.