Government Drops Charges for Offshore Wind, Hydrogen and Ammonia Projects to Boost Clean Energy

New Delhi: The government has made a significant announcement to boost the expansion of offshore wind energy initiatives and encourage the uptake of renewable energy from energy storage system projects. In order to achieve this, a complete waiver of Inter-State Transmission System (ISTS) charges has been introduced.

An ISTS (Inter-State Transmission System) is a means of transmitting electricity through a primary transmission line from one state's territory to another. This includes the conveyance of electricity through an intervening state's territory as well as any incidental conveyance within the state that is related to the Inter-State Transmission of energy. The ownership of an ISTS can belong to a Central Transmission Utility, State Utility, or Independent Power Transmission Companies. CTU (Central Transmission Utility) is responsible for the construction, ownership, operation, maintenance, and control of the system that facilitates the transmission of electricity within the State's territory.

The Ministry of Power, Goverment of India has announced that the waiver on transmission charges for renewable energy projects will extend to include green Hydrogen and Ammonia projects. This waiver will remain valid for 25 years and will be applicable to all projects commissioned until December 31, 2032.

The Ministry of Power has issued a notification stating that offshore wind power projects commissioned on or before December 31, 2032, will be granted a complete waiver of Inter-State Transmission System (ISTS) The fees will apply for a duration of 25 years starting from the commissioning date. Starting from January 1, 2033, offshore projects will be subject to graded Inter-State Transmission System (ISTS) charges. The waiver, which was previously granted until June 30, 2025, was exclusively applicable to all wind energy projects.

Moving forward, there will be a distinct classification and treatment of offshore wind, allowing for exemptions until December 31, 2032. Following this deadline, transmission charges will be applied in a graduated manner.

The government has announced a 25-year waiver of ISTS charges for green Hydrogen and Green Ammonia production units that use renewable energy sources such as pumped storage or battery storage systems, or a combination of these technologies. This waiver applies to projects commissioned after March 8, 2019.

Effective immediately, projects commissioned on or before December 31, 2030, will be eligible for a waiver. However, any projects commissioned after this date will attract graded transmission charges. This decision extends the original waiver date from June 30, 2025, to December 31, 2030, giving more flexibility to eligible projects.

The promotion of pump storage plants (PSP) has been advanced by linking the criteria for availing a complete waiver of ISTS charges for PSP projects to the project award date rather than the commissioning date. This update will only be applicable for construction projects that have been awarded on or before June 30, 2025.