The ISTS waiver has been a significant incentive for India’s renewable energy growth, driving rapid solar and wind capacity additions connected to the ISTS network. This article traces the waiver’s evolution from 2011 till date including changes in its methodology, complexities of its calculation and unpacks the implications of the waiver’s cross-subsidisation framework. Looking ahead, our analysis of future scenarios in 2030 indicates that waiver-related increases in transmission charges are projected to reach ₹0.16–0.20 per unit of non-RE generation by 2030, up from 7 paise/kWh today—nearly a 200% increase in 5 years, despite the gradual reintroduction of ISTS charges for various RE sources. This would be nearly 25% of the base transmission charges, up from ~14% presently (Aug 2025). Hence there is a need for a broader debate on the effectiveness of the waiver framework. Further, greater transparency in data reporting, policy certainty in sticking to waiver deadlines and a holistic assessment of landed costs is the need of the hour.

Over the past decade, India’s renewable energy (RE) sector has grown rapidly, supported by a range of policy measures. One of the most significant incentives has been the exemption from payment of Inter-State Transmission System (ISTS) charges and losses. With the end of the 100% ISTS charge waiver for standalone solar and wind projects in June 2025, it is important to revisit the history of this waiver, examine its present framework, and assess its implications for future ISTS transactions by distribution companies (DISCOMs), captive generators, and open access (OA) consumers.

For a detailed discussion on the evolution of ISTS transmission charge methodologies, readers may refer to Chapter 3 of the report Price it Right: Reforming InSTS Transmission Pricing, Building on ISTS Experience.

History

The waiver of ISTS charges and losses for renewable energy (RE) was first introduced through the CERC Sharing of Inter-State Transmission Charges and Losses Regulations, 2010 (effective from 1^st Jan, 2011), which brought in the Point of Connection (PoC) mechanism. Initially, only solar projects commissioned within three years of the notification were exempted from paying both transmission charges and losses for their entire useful life. At that time, the cost of solar generation was in the range of ₹14–18 per unit, and the waiver provided a boost to viability. However, certain aspects were unclear, particularly whether the waiver should be calculated in terms of installed MW capacity or actual/scheduled generation. The Commission noted that “Since such generation would normally be connected at 33 kV, the power generated by such generators would most likely be absorbed locally. This would cause no / minimal use of 400 kV ISTS network and might also lead to reduction of losses in the 400 kV network by obviating the need for power from distant generators.”¹

In the early stages, stakeholders raised concerns about the solar waiver. These were addressed in the 3^rd Amendment to the 2010 Sharing Regulations.² CERC’s calculations at the time estimated that the total impact of the waiver on ISTS users would be around 13.9% of the total transmission tariff³, with about 10% attributable to transmission charges and 4% to losses.⁴ In monetary terms, this translated to roughly 2.1 paise per unit, considered marginal. Suggestions to extend the waiver to wind and small hydro were made but set aside for further review.

The framework evolved significantly with the Tariff Policy 2016, which extended waivers (charges and losses) to both solar and wind power. This was followed by a series of Ministry of Power (MoP) orders that broadened the scope of waivers, especially for transmission charges and subsequent CERC amendments in its Sharing Regulations to operationalise them. The waiver for transmission losses was discontinued from 30 June 2023. Since then, the waiver provisions have been extended to emerging and futuristic green technologies as well. These developments are summarized in Figure 1 and detailed further in the Annexure.

Figure 1: Evolution of waiver framework in ISTS (CERC regulations)

Source: Based on PEG’s analysis and compilation

Present Waiver Framework

With several amendments and policy interventions over the years, the waiver framework for ISTS charges now applies to a wider range of RE and emerging technologies. Tables 1 and 2 below summarize the current provisions.

Table 1: ISTS charges waiver for RE projects

Sources	On or before 30.6.2025	1.7.2025 to 30.6.2026	1.7.2026 to 30.6.2027	1.7.2027 to 30.6.2028	After 30.6.2028
Renewable Energy Generating Stations (REGS) based on wind or solar source or Renewable Hybrid Generating Stations (RHGS) based wind and solar source, with COD	100%	75%	50%	25%	0%
Hydro PSP ESS, for which construction work has been awarded on or before	100%	100%	100%	100%
Battery ESS connected at a substation where REGS is connected and is charged from such REGS, with COD	100%	100%	100%	100%
Battery ESS connected at a substation where no REGS is connected or Battery ESS connected at a substation where REGS is connected but Battery ESS is charged from Grid or source other than REGS or any other battery ESS not covered above, with COD	100%	75%	50%	25%	0%
Hydro generating station with date of signing of PPA and award of construction work	100%	75%	50%	25%	0%
Solar PV generating station under SECI manufacturing linked capacity scheme	100%	100%	100%	100%	100%

Source: PEG compilation based on 4^th Amendment to CERC’s Sharing Regulations 2020

Table 2: ISTS charges waiver for emerging technologies

Sources	Up to 31.12.2030	01.01.2031 to 31.12.2031	01.01.2032 to 31.12.2032	01.01.2033 to 31.12.2033	01.01.2034 to 31.12.2034	01.01.2035 to 31.12.2035	After 31.12.2035
Offshore Wind, with COD	100%	100%	100%	75%	50%	25%	0%
Green Hydrogen or Green Ammonia Plant as a drawee DIC, with COD	100%	75%	50%	25%	0%	0%	0%

Source: PEG compilation based on 4^th Amendment to CERC’s Sharing Regulations 2020

Impact on RE Capacity Growth

Although waivers have not been the sole driver, they have played an important role in catalysing large-scale RE capacity additions. ISTS-connected RE (excl. large hydro) capacity grew from just 3.95 GW in October 2019 to 39.6 GW by June 2025 (out of a national total of 179 GW RE). This represents nearly a ten-fold increase in less than six years, raising ISTS’s share of total RE capacity to about 20%. It is worth noting that most of this capacity has come up only in few states like Rajasthan, Gujarat, etc. However, many more connectivity applications for projects in these regions have been approved by CTU (RJ-~60 GW, GJ-~31 GW) creating additional risks of transmission bottlenecks or right of way in those regions. 

Looking ahead, around 142 GW of RE projects (ISTS and InSTS) are at various stages of construction nationally, comprising 85 GW of solar, 27.8 GW of wind, and 29.7 GW of hybrid projects. Further, CTU data (March 2025) shows that approximately 153 GW of RE projects—including PSP and hydro—have been approved for ISTS connectivity, representing 93% of all applications (~163 GW). Further, as per CEA estimates, ~6.5 lakh crore worth of investments is expected in the ISTS transmission network (addition of 95k ckm of transmission lines and 8.2 lac MVA transformation capacity) during 2022-32.⁵

Given this pipeline, it becomes crucial to examine the financial implications of ISTS waivers on other system users. The next step in this analysis is to understand how waivers have been reflected in actual monthly billing to ISTS consumers and how this methodology has evolved. We also try to estimate the quantum of this waiver by 2030.

Accounting for the Waiver in Actual Billing

Determining which projects are eligible for a waiver is one aspect; equally important is how these waivers are reflected in the bills issued to ISTS users. The accounting methodology directly influences the choices of both RE generators (when applying for ISTS connectivity or participating in tenders) and drawee entities (when signing PPAs with ISTS-connected projects). Over time, the approach to waiver accounting has evolved considerably.

Initial Approach (2011 Onwards): From 2011, waivers were initially granted based on the share of eligible RE capacity (in MW) relative to the total contracted capacity at the national ISTS level. The process worked as follows:

• Without RE waiver
  Transmission charges (TC₁, ₹/MW/month) = Total monthly ISTS charges ÷ Contracted capacity⁶
• With RE waiver
  Transmission charges (TC₂, ₹/MW/month) = Total monthly ISTS charges ÷ [Contracted capacity – eligible RE capacity]

The effective waiver for any user depended on the net impact of increase in per-MW charges (TC₂ – TC₁) and the reduction in effective contracted capacity (due to the exempted RE share). Initially, charges were levied on both injecting and drawee entities, but this was later limited to drawee entities alone.

2020 Framework: The Sharing Regulations 2020 further refined the methodology wherein transmission charges were divided into multiple components (shown in table 3), each linked differently to contracted capacity at national, regional, or state levels, or to usage.

Table 3: Transmission Charge Components and their linkage under CERC Sharing Regulations, 2020

Component	Link to contracted capacity (LTOA/ MTOA) or usage
National component-RE	Proportion of entity’s contracted capacity in total contracted capacity at national level
National component-HVDC	Proportion of entity’s contracted capacity in total contracted capacity at national level
Regional component	Proportion of entity’s contracted capacity in total contracted capacity at regional level
Transformer component	Proportion of entity’s contracted capacity in total contracted capacity at state level
AC component-Usage based	No linkage to contracted capacity, instead linked to respective usage of transmission lines
AC component- Balance component	Proportion of entity’s contracted capacity in total contracted capacity at national level

Source: PEG compilation based on CERC Sharing Regulation 2020

Notes: Contracted capacity means the entire LTOA/MTOA contracted ISTS capacity irrespective of any generation source

Shift to Drawal-Based Accounting (2023 Amendment): With the 1st Amendment to the 2020 Regulations (effective 1 October 2023), waiver accounting shifted fundamentally. Instead of being based on contracted capacity, it is now linked to the share of RE in an entity’s actual ISTS drawal. This share is calculated for every 15-minute time block, then averaged monthly to determine the waiver percentage for each drawee entity. The methodology is defined in Clause (1)(b)(i) of Annexure III of the 2020 Sharing Regulations:

“Waiver of a drawee DIC other than a drawee DIC which has obtained “GNA_RE” shall be calculated based on the following formulae:

where,

“SDRG” is the drawl schedule (in MW) through ISTS under GNA from the sources eligible for waiver under Regulation 13 of these regulations in nth block;

“SDTG” is the total drawl schedule (in MW) under GNA through ISTS from all sources in nth block;

“n” is the nth time block

“T” is number of time blocks in a month = 96 X number of days in a month

Provided that in case the “SDTG” for a time block is less than 75% of the maximum schedule corresponding to GNA, the “SDTG” shall be taken as 75% of maximum schedule corresponding to GNA for a time block.”

Each entity’s waiver amount is then computed as: Waiver % × Transmission charges for that entity. Finally, the aggregate waiver at national level (sum of all drawee entities waiver amounts) is apportioned among all drawee entities in proportion to their transmission charges.

Another change was a combined effect of the 1st Amendment to the 2020 Regulations and the CERC GNA regulations. The charge components listed in table 3 were now linked to GNA, instead of contracted capacity (LTA / MTOA).

Effect of cross-subsidisation

As described above, the waived amounts are apportioned across all drawee entities. This mechanism effectively results in cross-subsidisation, where some entities pay more to enable others to benefit from the waiver. Let us try to understand the impact of cross-subsidisation through simple illustrations. In the illustrations, we have considered just 3 drawee entities under both accounting methodologies described above, namely, the initial MW linked and the modified drawal based.

Illustration 1: MW-Linked Methodology: Table 4 shows how waivers were calculated under the earlier capacity-based (MW-linked) approach.

Table 4: Illustration for Capacity (MW) linked waiver methodology

Particular	Units	Formula	Entity A	Entity B	Entity C	Total
Transmission charges w/o waiver	Rs. crore	(A)				365
Total LTA+ MTOA	MW	(B)	50	62.5	70	182.5
Transmission charges w/o waiver	Rs. lac/MW	(C)=sum(A)/sum(B)				200.0
LTA/ MTOA exempted	MW	(D)	6.8	15.6	4	26.4
Waiver %	%	(D1)=(D)/(B)	13.6%	25.0%	5.7%	14.5%
Transmission charges w/o waiver	Rs. crore	(E)=B*sum(C)	100.0	125.0	140.0
Transmission charges with waiver	Rs. crore	(F)=sum(C)*[(B)-(D)]	86.40	93.80	132.00	312.2
Gross Waiver	Rs. crore	(G)=(E)-(F)	13.60	31.20	8.00	52.8
Transmission charges with waiver	Rs. lac/MW	(H)=sum(A)/[sum(B)-sum(D)]				233.82
Effective transmission charges to be paid	Rs. crore	(I)= (H)*[(B)-(D)]	101.01	109.66	154.32	365
Effective waiver for the entity	Rs. crore	(J)= (E)-(I)	-1.0	15.3	-14.3	0

Key Findings:

• Entity A, though eligible for a waiver of ₹13.6 crore (6.8 MW capacity), ends up paying ₹1 crore extra.
• Entity B receives a significant benefit.
• Entity C, like Entity A, also contributes more than it gains.

This outcome occurs because the waiver, though calculated for each entity, is ultimately socialized across all ISTS users. Those entities (in this case, entity A and C) whose waiver % is lower than the average waiver % (14.5%) end up paying extra while the entities (in this case entity B) whose waiver % is higher than the average, ends up getting the benefit.

Illustration 2: Generation-Linked Methodology: Under the revised approach (linked to RE generation share in ISTS drawal), waiver percentages are estimated assuming 75% PLF for conventional plants and 25% CUF for RE plants. For example, RE capacity for entity A is 6.8 GW. So, effective RE generation exempted for waiver for entity A is determined as follows: (6.8*25%)/ [(6.8*25%) +(50-6.8)*75%) =5%.

Table 5: Illustration for generation linked waiver methodology

Particular	Units	Formula	Entity A	Entity B	Entity C	Total
Transmission charges w/o waiver	Rs. crore	(A)	100	125	140	365
RE Waiver %	%	(B)	5%	10%	2%
Gross Waiver	Rs. crore	(C)=(A)*(B)	5	12.5	2.8	20.3
National average waiver %	%	(B1) =sum(C)/sum(A)				5.56%
Transmission charges to be paid after waiver	Rs. crore	(D)=(A)-(C)	95	112.5	137.2	344.7
Entity's Share in total transmission charges	%	(E)=(D)/Sum(D)	27.6%	32.6%	39.8%
Apportioning waiver to each entity in proportion to Transmission charges w/o waiver	Rs. crore	(F)=(E)*sum(C)	5.59	6.63	8.08	20.3
Effective transmission charges to be paid	Rs. crore	(G)=(D)+(F)	100.59	119.13	145.28	365
Effective waiver for the entity	Rs. crore	(H)=(A)-(G)	-0.59	5.87	-5.28	0.00

Key Findings:

• Entity A was eligible for a waiver worth ₹5 crore but ends up paying ₹0.59 crore extra.
• Entity C also pays more than its entitlement.
• Only Entity B sees a net benefit.
• Overall, the net effective waiver quantum drops sharply: from ₹20.3 crore gross to just ₹5.87 crore net after cross-subsidization—a 71% reduction.

These examples highlight two important points:

1. Socialization effect: Even when an entity qualifies for a waiver, it may not realize the full benefit.
2. Determinants of waiver quantum: An entity’s waiver is shaped not only by its own RE drawal share, but also by the national average waiver percentage and its share of total ISTS transmission charges.

Comparing both methodologies shows that the shift from MW-linked to generation-linked accounting reduces both the gross and net effective waivers significantly. The lower CUF of RE plants relative to conventional coal-based plants⁷ further amplifies this effect, diminishing the actual benefit available to entities.

Actual ISTS Data and Analysis

With the framework for waivers now clearer, it is useful to examine actual ISTS billing data to understand the scale of waivers and their distribution. Preliminary calculations based on Grid-India’s published data for November 2023, December 2023, and August 2025 provide valuable insights.⁸

Table 6: RE Waiver for Nov - Dec 2023 and Aug 2025

Particular	Units	Nov-23 (Estimated)	Dec-23 (Actual)	Aug-25 (Estimated)
Methodology		(linked to capacity)	(linked to generation)	(latest month)
Total Transmission charges payable	Rs. Crore	3,631	3,875	3,815
Gross Waiver in Transmission Charges	Rs. Crore	688	194	388
Waiver as % of total charges	%	18.94%	5.02%	10.18%
RE waiver post cross-subsidization	Rs. Crore	199	62	101
RE waiver as % of total charges (post cross-subsidization)	%	5.47%	1.60%	2.65%

Source: PEG’s analysis of Monthly Transmission charges for DICs, reported by Grid-India

Notes: 1) The waiver quantum for November 2023 and August 2025 months shown above are estimated based on PEG’s calculations. 2) Waiver quantum for December 2023 is as reported by Grid-India in its monthly reports. 3) For the month of August 2025, we have considered waiver % for a prominent DIC in each state/zone as the waiver % for that zone (e.g., waiver % for MSEDCL is considered for Maharashtra zone). This is because waiver % at state/zone level are not being provided by Grid-India in its recent monthly reports. 4) These months were selected to show the impact of change in methodology and the latest month data. They are not fully comparable given the change in monthly ISTS generation and drawal. 

Key Insights:

• In November 2023, while the gross waiver amounted to ~₹688 crore, the same was re-apportioned to all entities (as shown in table 4) as this waiver is not paid for by any direct budgetary subsidy support. As a result, some entities had to pay more and did not receive any waiver while some entities received a portion of waiver as an effect of cross-subsidisation. The net effective waiver received by these latter entities was ~₹200 crore.
• By December 2023, the gross waiver itself declined sharply to ~₹194 crore (just 5% of total charges), reflecting the shift from capacity-based to generation-linked methodology. The net effective waiver dropped further to only 1.6% of total charges.
• In August 2025, with RE’s growing share in ISTS flows, gross waivers rose again to ~₹388 crore (10% of charges), though the effective waiver remained low at 2.6%.

This shows that while absolute waiver amounts vary, cross-subsidisation consistently reduces the effective benefit to one-third or less of the gross waiver. While the analysis above shows the all India picture, there will be differences in waiver benefits across states/zones due to variation in GNA, RE procurement and transmission charge components.⁹ 

Per-Unit Impact: Another way to assess the effect of waivers is to examine the per-unit increase in transmission charges.

Table 7: Impact of RE waiver on per unit generation basis for Dec 2023 and Aug 2025 (estd.)

Parameter	Unit	Formula	Dec-23	Aug-25 (estd.)
Total ISTS Generation	MU	(A)	60,676	72,873
Total ISTS-RE Generation	MU	(B)	3,929	8,905
Total Tx charges	Cr	(C)	3,875	3,815
Tx charges per unit	Rs./unit	(D)= (C)/(A)	0.64	0.52
Tx charges per unit (excl. RE injection)	Rs./unit	(E)= (C)/[(A)-(B)]	0.68	0.60
Waiver impact (per unit)	Rs./unit	(F)= (E)-(D)	0.04	0.07

Source: PEG’s analysis based on data reported by Grid-India and CEA

Key Insights:

• In December 2023, the waiver increased per-unit charges by about 4 paise for each unit of non-RE generation.
• In less than 2 years, by August 2025, the impact had nearly doubled to 7 paise per unit of non-RE generation, driven partly by RE’s rising share in ISTS flows.

While these per-unit impacts may appear modest, their steady growth signals a significant cumulative effect as RE penetration increases.

Looking Ahead to 2030: For this analysis we assumed:

• Coal PLF of 75% and solar/wind CUF of 25% and 35% respectively,
• Growth rates for Transmission charge per MW of GNA of 3%, 5%, and 7% CAGR scenarios,
• Different levels of GNA optimization¹⁰ for solar capacity (40%, 50%, 75% as scenarios), no GNA optimisation for non-solar capacity.
• Capacity addition each year till March 2030 (totaling 190 GW, as presently approved by CTU).
• Use of some upcoming solar/wind capacity for charging standalone BESS to reduce impact of gradual imposition of ISTS waiver.

This analysis of future scenarios for an average month in 2030, under current waiver rules yields the results shown in Table 8.

Table 8: Impact of waiver in an avg. month in 2030 under various scenarios

Parameter	Unit	Formula	Avg. month in 2030 (estd.)
Total ISTS Generation	MU	(A)	111,960
Total (Exempted) ISTS-RE Generation	MU	(B)	22,492
Total Transmission charges	Cr	(C)	7,006-8,714
Transmission charges per unit	Rs./unit	(D)= (C)/(A)	0.63-0.78
Transmission charges per unit (excl. RE injection)	Rs./unit	(E)= (C)/[(A)-(B)]	0.78-0.97
Waiver impact (per unit)	Rs./unit	(F)= (E)-(D)	0.16-0.20

Note: The range of values corresponds to different scenarios. We have assumed capacity addition of only 190 GW (approved as of March 2025), which may actually increase over time, thereby further increasing the waiver quantum.

Key Insights:

• The scale of monthly transmission charges ranges from 7,006-8,714 cr depending on the combination of CAGR for transmission charges and GNA optimisation for solar.
• The base transmission charges (without excluding RE generation) range from Rs. 0.63-0.78 per unit.
• The transmission charges (excluding RE generation) will range from Rs. 0.78-0.97 per unit of non RE generation.
• By 2030, waiver-related increases in transmission charges are projected to reach ₹0.16–0.20 per unit of non-RE generation, up from 7 paise today—nearly a 200% increase in 5 years, despite the gradual reintroduction of ISTS charges for various RE sources. This would be nearly 25% of the base transmission charges, up from ~14% presently (Aug 2025).

Another, Less-Discussed Concession for RE

While the waiver of ISTS charges has received significant attention, there is another concession built into the Sharing Regulations 2020 pricing framework: the National Component–Renewable Energy (NC-RE). What is NC-RE? The CERC regulations define it as:

“National Component–Renewable Energy shall comprise the Yearly Transmission Charges for transmission systems developed for renewable energy projects as identified by the Central Transmission Utility (CTU).”

In practice, this means that transmission systems built specifically for renewable energy are grouped under NC-RE. Their costs are then shared by all drawee entities at the national level in proportion to their General Network Access (GNA) and GNA_RE allocations. In other words, this cost is also socialized across the system. Figure 3 depicts monthly NC-RE charges (Rs. Crore) as well as its share in total charges.

Figure 2: Trend of National Component (NC-RE) in ISTS Charges
Source: PEG compilation based on Grid-India monthly reports on Transmission charges

Notes: The green bars indicate the quantum in Rs crore while the red line shows the percentage share in total charges.

Current and Future Trends

• As of June 2025, NC-RE accounts for roughly 9% of total ISTS charges, up from ~1.5% in Jan 2021.
• The component has been growing steadily in the last two years, as reflected in Grid-India’s monthly reports. However, since inception, it has increased from ~₹40 crores to ~₹350 crores in 4.5 years.
• With ~90% of CTU approved (as of March 2025) ISTS-connected generation capacity expected to be RE-based (mainly solar and wind, ~150 GW), NC-RE’s share is projected to rise further.
• At ~40 GW of ISTS-connected RE capacity, the NC-RE component is ~₹350 crore per month. With ~150 GW additional RE expected in the near future, the share of NC-RE is likely to increase quite significantly and with it, the financial burden of NC-RE on non-RE users will grow.

While NC-RE provides critical support for scaling RE, it raises questions of transparency and fairness. Classification criteria – There are currently no published public guidelines from CTU or CERC on how a transmission project is designated as NC-RE eligible project.

Conclusions

The evolution of the ISTS waiver framework highlights both its importance in supporting renewable energy and the challenges in sustaining it.

Concentration of projects in limited locations: Waivers resulted in significant concentration of projects in states with high quality RE resource and relatively low cost land availability. 

• However, delays in commissioning transmission infrastructure are now beginning to impact evacuation of various RE projects from such states.¹¹ Such delays are also resulting in increased RE curtailment from those areas.¹² Further, there are increasing instances of deferral of projects due to transmission constraints and right of way issues in those regions.
• Sharp reduction in waiver quantum due to change in methodology: Gross waivers declined from ~ ₹688 crore in November 2023 to ~ ₹194 crore in December 2023 following the shift in methodology from capacity (MW)-based to generation-linked accounting. Cross-subsidisation further reduced the effective net waiver available to beneficiaries.
• Absolute scale of waiver increasing with rising RE share: Although waivers have since risen again (~₹400 crore by August 2025 in less than 2 years), the effective benefit remains low as of now.
• Possibly reducing influence on procurement decisions: While waivers were initially (pre-Nov 2023) a strong incentive for RE siting and procurement, changes in methodology and the effects of socialization have reduced their impact.
• Changes in future procurement trajectory: With CERC regulations extending the waiver framework until FY 2030 (for RE/ESS) and FY 2035 (for offshore wind and green hydrogen/ammonia), stakeholders are expected to optimize project design and procurement strategies to maximize benefits. This combined with the recently notified 3^rd amendment to the CERC’s Connectivity and GNA Regulations which bring in the framework for differentiated access with injections rights in solar and non-solar hours could lead to a shift from pure solar/ wind/ hybrid procurement to a greater emphasis on PSP and standalone BESS. Among other considerations, the gradual reintroduction of ISTS charges along with the evolution of transmission evacuation bottlenecks will determine the relative share between ISTS and InSTS projects.
• Opportunity for Green Open Access (OA) and Captive (CPP) consumers: Historically, OA and CPP projects were largely limited to InSTS connectivity given the minimum threshold of 50 MW for ISTS connectivity and the provisions of energy banking for state projects. However, with the gradual tightening of the energy banking framework, introduction of Green OA Rules and regulations, amendments in the GNA regulations and reduction in storage prices, there is an increasingly likelihood of Captive and Open Access projects with ISTS connectivity. A recent estimate puts this at 40 GW of ISTS Green OA capacity by 2030. As these consumers will have a very high share of RE compared to an average drawee entity (mostly large DISCOMs), such CPP and OA consumers will be relatively benefited going forward.     
• Rising NC-RE component: In addition to waivers, the NC-RE component represents another part concession—already ~9% of total ISTS charges, with the potential to rise significantly as RE capacity expands. Unlike waivers (as noted in Table 1 & 2), there is currently no roadmap for its phase-out or clear framework for project classification.

Way Forward

To ensure transparency, equity, and long-term sustainability of the waiver framework, the following measures merit consideration:

1. Broader debate needed: Given the expected increase in the scale of the ISTS waiver as shown from the analysis and some of its un-intended impacts (transmission bottlenecks, higher curtailment), there is a need for a broader deliberation on the effectiveness of the existing waiver framework and potential changes for improvement. This should help the sector achieve more balanced growth of RE across the country.¹³  
2. Policy certainty: The waiver framework deadlines has been extended multiple times over the years as shown in Annexure 1. Additionally, the framework has been broadened to include newer sources as well. The present framework has laid down a clear timeline for gradually re-introducing transmission charges across sources. It is extremely important to stick to this timeline and not relax it for policy certainty and broader sector viability.
3. Transparency in reporting – Grid-India should publish actual effective RE and ESS waiver data at both national and drawee-entity levels. This will enhance confidence and support better procurement decisions by DISCOMs and other buyers. Further, CERC and Grid-India should periodically assess the cumulative financial impact of ISTS RE and ESS waivers and ensure transparent allocation of exempted costs across beneficiaries.
4. Holistic cost assessment – Encourage DISCOMs to look beyond just waivers and focus on the landed cost of energy at their periphery, including demand profile alignment and system integration requirements.
5. Guidelines for NC-RE – Develop and publish a clear framework for identifying RE transmission projects under NC-RE, ensuring accountability in cost allocation and enhancing confidence among stakeholders. A wider discussion on the objective of this component, its implications, guiding framework and its future may be considered by CERC.

To conclude, while waivers and concessions have played a crucial role in accelerating ISTS-RE capacity addition, the time has come to critically re-examine their design. A more transparent, equitable, and forward-looking framework will be vital for balancing India’s ambitious RE targets with the financial sustainability of the power system.

The authors thank Sreekumar Nhalur for his valuable inputs and review of this document.   Comments and suggestions on the series are welcome and can be addressed to This email address is being protected from spambots. You need JavaScript enabled to view it.