According to a notification released by the Ministry, no interstate transmission charges or losses will be levied on solar projects commissioned before June 30th 2017. The waiver is only available to projects awarded through competitive bidding, and those that sell their power through the interstate transmission system (ISTS). Once a project is commissioned, the waiver will be available for 25 years.
This policy is good news for large scale solar in the short term, Says Raj Prabhu, CEO of Mercom Capital. The Ministry of Power should take the next step and extend the deadline by a few years to help spread solar power consumption across the country.
India must rely on large scale & hybrid solar/wind projects to reach 175 GW of renewables capacity by 2022. Uneven project concentration has led to many developers paying high costs for interstate transmission; the cost reduction brought about by the waiver will attract more players to the renewable sector. Solar power tariffs could fall by as much as 10% in some cases.
A Ministry of Renewable Energy official says that the policy will provide projects with an option to sell power to the national grid without incurring losses or transmission charges. The official also added that they hope to keep up the pace of installation, as well as helping states with lower renewable energy potential to fulfill their Renewable Purchase Obligations.
The Central Electricity Regulatory Authority (CERC) extended the waiver from an original announcement made in 2015, that solar projects commissioned between July 1st 2011 and June 30th 2014 would not be charged transmission fees to use the ISTS.
Mercoms Prabhu was optimistic about the potential for solar to capitalize on the waiver: Low module prices, along with the transmission waiver, could help some of the low bid solar projects become workable if they can be commissioned by June of next year."