ISTS Waiver
To promote the development of renewables in RE-rich states and encourage inter-state procurement of renewables, the central government allowed waiver of ISTS charges and losses for solar and wind projects in 2016. Through various subsequent orders, the Ministry of Power (MoP) extended the deadline of ISTS waiver for some solar and wind project categories commissioned till 30th June, 2025. Recently, the ambit of the waiver has been widened for green hydrogen, large hydro plants, pumped storage hydro (PSH) and battery storage (BESS). We have tracked the several amendments and evolution of the ISTS waiver framework since 2016 below.
MoP Order May 2023
Date of Notification
29th May, 2023
Applicability of order
Applicable prospectively, i.e., from date of issue of order
Storage
1. Waiver of ISTS charges for Hydro PSP project has been made subjectto'award of construction work' instead of 'commissioning' mentioned earlier.
2. Drawee entities, including Green Hydrogen/Green Ammonia Plants and Discoms, which contract energy (or capacity) from an ESS Project Scheme, shall be granted exemption from the payment of ISTS Charges if they draw a minimum of 51% of the annual energy contracted with or consumed from ESS as renewable energy.
2. Drawee entities, including Green Hydrogen/Green Ammonia Plants and Discoms, which contract energy (or capacity) from an ESS Project Scheme, shall be granted exemption from the payment of ISTS Charges if they draw a minimum of 51% of the annual energy contracted with or consumed from ESS as renewable energy.
Clarifications on certain aspects
1. The waiver shall be allowed only for ISTS charges but not for ISTS losses.
2. If a Renewable Energy Project which is eligible for ISTS waiver in terms of extant orders is granted extension in Date of Commercial Operation (COD) by the competent authority, the project would not be deprived from applicable waiver of ISTS charges based on the original COD.
2. If a Renewable Energy Project which is eligible for ISTS waiver in terms of extant orders is granted extension in Date of Commercial Operation (COD) by the competent authority, the project would not be deprived from applicable waiver of ISTS charges based on the original COD.
Green Hydrogen
Green Hydrogen/Green Ammonia Plants commissioned on or before 31.12.2030, and which utilize renewable energy from Solar, Wind, Large Hydro commissioned after 8th March 2019, or Energy Storage Systems (ESS) (such as Pump Storage Plants or Battery Energy Storage Systems) or any hybrid combination of aforementioned technologies, for the production of Green Hydrogen or Green Ammonia, shall be granted exemption from the payment of ISTS Charges for a period of 25 years, starting from the date of commissioning of the project. Further, the Green Hydrogen/Green Ammonia Plants commissioned after 31.12.2030 shall be levied ISTS charges as per the trajectory specified below:
a. Commissioned between 1st Jan, 2031 to 31st December, 2031: 25% of the applicable ISTS charges
b. Commissioned between 1st Jan, 2032 to 31st December, 2033: 50% of the applicable ISTS charges
c. Commissioned between 1st Jan, 2034 to 31st December, 2035: 75% of the applicable ISTS charges
d. Commissioned on or after 1st Jan, 2036: 100% of the applicable ISTS charges
a. Commissioned between 1st Jan, 2031 to 31st December, 2031: 25% of the applicable ISTS charges
b. Commissioned between 1st Jan, 2032 to 31st December, 2033: 50% of the applicable ISTS charges
c. Commissioned between 1st Jan, 2034 to 31st December, 2035: 75% of the applicable ISTS charges
d. Commissioned on or after 1st Jan, 2036: 100% of the applicable ISTS charges
Offshore wind
Projects commissioned on or before 31st December, 2032 and established via PPAs or under merchant basis, shall be granted exemption from the payment of ISTS Charges for a period of 25 years, starting from the date of commissioning of the project. Further, the offshore wind power projects commissioned after 31st December, 2032 shall be levied ISTS charges as per the trajectory specified below.
a. Commissioned between 1st Jan, 2033 to 31st December, 2034: 25% of the applicable ISTS charges
b. Commissioned between 1st Jan, 2035 to 31st December, 2035: 50% of the applicable ISTS charges
c. Commissioned between 1st Jan, 2036 to 31st December, 2036: 75% of the applicable ISTS charges
d. Commissioned on or after 1st Jan, 2037: 100% of the applicable ISTS charges
a. Commissioned between 1st Jan, 2033 to 31st December, 2034: 25% of the applicable ISTS charges
b. Commissioned between 1st Jan, 2035 to 31st December, 2035: 50% of the applicable ISTS charges
c. Commissioned between 1st Jan, 2036 to 31st December, 2036: 75% of the applicable ISTS charges
d. Commissioned on or after 1st Jan, 2037: 100% of the applicable ISTS charges