Power produced from wind and solar projects will become viable, and more attractive for discoms as the government last week waived off inter-state transmission charges for wind and solar projects commissioned till March 2022, in a bid to encourage the use of power generated through these sources.
“For generation projects based on solar and wind resources, no interstate transmission charges and losses will be levied on transmission of the electricity through the inter-state transmission system for sale of power by such projects commissioned till 31st March 2022,” said a letter issued by the power ministry last week.
The move will take away future possibilities of additional cost to discoms, encouraging them to purchase power produced from wind and solar projects, the industry said. “This should give discoms good reasons to meet their renewable purchase obligations,” a renewable energy developer said on condition of anonymity.
The revised Tariff Policy 2016, states that “in order to further encourage renewable sources of energy, no interstate transmission charges and losses may be levied till such period as may be notified by the Central government on transmission of the electricity generated from solar and wind sources of energy through the inter-state transmission system for sale”.
For wind and solar projects, the existing waiver was previously applicable to projects commissioned up to March 31, 2019 and December 31, 2019, respectively.
“This should also help more people go for the next round of bidding because projects will look more viable,” said the person cited above. “This should give more impetus. Tariffs are already pretty low, and this should come as a relief.” Solar and wind power tariffs in the last few months have already reached grid-parity, helping it compete with thermal power. With the transmission charges waived off, it will make selection of location for these projects more efficient, experts say.
“The waiver is very positive for power utilities, who can now source wind and solar power from the few resource-rich states,” said Kameswara Rao, leader-energy, utilities and mining at PwC India. The policy is very positive for renewable companies as they can sell to all obligated entities (that is, all who are required to meet renewable purchase obligation) and not just power utilities, Rao pointed out. “Also, given the long time frame, renewable companies will try to set up multiple mega projects,” he said.
The waiver applicable for 25 years since the date of signing a power purchase agreement (PPA), will be allowed to only those solar and wind projects that are awarded through competitive bidding process.
