India to halt interstate transmission charges on solar projects until 2019

India’s Ministry of New and Renewable Energy (MNRE) has taken the decision to suspend interstate transmission charges on solar power projects in an effort to make the energy source more competitive on price with thermal power.

The government ministry took the decision to delay the introduction of these charges until the end of 2019 after calculating that the costs for using solar power from another state would be raised by INR 1 – 2.50/kWh depending upon the distance of transmission required.

“For generation projects based on solar resources, no interstate charges or losses will be charged for use of the interstate transmission system until December 31 2019,” confirmed joint secretary in the ministry of power, Jyoti Arora.

With solar tariffs reaching an all-time low of INR 2.44/kWh at the Bhadla Solar Park auction last month, industry observers had feared that the government would reinstate the interstate transmission charges once the current exemption period ends on June 30.

But given the new 5% Goods and Services Tax (GST), and the slight possibility of anti-dumping (AD) duties being levied on imports from China, Taiwan and Malaysia, the MNRE evidently felt that solar is still in need of some state-backed support in order to maintain its current competitiveness with thermal power.

Jasmeet Khurana, associate director at consultancy firm Bridge to India, remarked that it is only now that power procurers have begun to use interstate transmission as a route to sourcing solar power. The Delhi Metro Rail Corporation (DMRC) in April signed an agreement to meet most of its daytime power needs from the solar energy produced at the 750 MW Rewa solar park in Madhya Pradesh – an agreement predicated on their being no such transmission charges levied.