Centre plans to push for more renewable energy connectivity in states

With the dual purpose of enhancing power transmission infrastructure in states and boosting renewable energy (RE) connectivity across all regions, the ministry of power is planning to push states to connect upcoming RE projects to state grids and not the national grid.

Senior government officials indicated that the current Inter-State Transmission System (ISTS) waiver given to renewable energy projects when they connect to the national grid may be “relooked” at in the next financial year.

They said as the cost of connecting to the state's grid is lower than connecting to the national grid, this would be beneficial for RE project developers. It will also bring down the cost of green energy in the country.

As more transmission projects come at the intra-state level, the Centre is hoping it will bolster private investment in state power infrastructure.

In 2019, the ministry of power announced a waiver of ISTS charges for solar and wind power projects.

ISTS is levied on a project when it is connected to the national power grid of India to supply electricity anywhere in India. The ISTS charges could range from Rs 1 to Rs 2.5 per unit.

Since 2019, the tariff of RE projects has fallen below Rs 2, partially because of the waiver.

Every year, the Centre has extended the waiver with the latest one being till June 2025.

It has also included other RE sources such as pumped hydro, battery storage, green hydrogen and offshore wind to the list of waived projects.

“States will be pushed to connect new RE projects to their own grid, rather than the national grid. There is a need for transmission capacity enhancement at the end of states. As most RE projects were coming in the Western region, the transmission capacity there has become constrained. New lines need to be built in other regions too,” said a senior official.

A lot of upcoming projects in the Western region are facing a crunch of sub stations to connect to the national grid.

Sector observers said the cost of connecting to the national grid is over Rs 1.5 crore per unit while for the state grid, it is Rs 80-90 lakh.

According to industry estimates, there are around 20 projects worth Rs 80,000 crore planned under the ISTS network.

Officials, citing the National Electricity Plan, said Rs 4.7 trillion worth of transmission projects are required by 2027. This will include Rs 3.1 trillion of investment at the national (inter-state level) level and balance at the intra-state level.

According to official and industry estimates, there is a requirement of 35-gigawatt (Gw) transmission capacity enhancement between West and North, and 20 Gw each between West and South and West and East.

From South to West, the grid requirement stands at 15 Gw.

These will cater to RE projects, including mega solar parks coming up in Gujarat, Rajasthan, Tamil Nadu and Karnataka.

With more coal power plants being planned near the coal mines which are mainly in the Eastern region of the country, around 5 Gw of transmission is being planned in the East to North and South routes. 

Officials said there are plans to amplify the capacity in the Northeast to support upcoming hydro power projects.

Transmission lines in the Southern region will focus on pumped hydro projects where a significant capacity of this novel energy storage technology is coming up.

Green bet

 Cost of connecting to state grids lower than connecting to the national grid

 Move may bring down the cost of green energy

 May bolster private investment in state power infrastructure