End of inter-state transmission fee waiver for solar, wind projects to hit 26 GW renewable projects: Crisil

Around 26 gigawatt of renewable energy projects are expected to get impacted with the end of waiver on the inter-state transmission system (ISTS) charges provided for solar and wind projects, according to Crisil Ratings.

The deadline for announcing an extension on waiver on Inter-State Transmission System (ISTS) charges for setting up and commissioning solar and wind projects ended on June 30, 2025.

In a recent report, Crisil Ratings said, "Around 26 gigawatt of under-construction utility scale renewable energy projects, for which power purchase agreements (PPAs) have already been signed, may face moderation in cash flow following expiry of the 100 per cent ISTS charge exemption on June 30, 2025."


These projects, which have experienced commissioning delays due to procedural, regulatory, and infrastructure-related challenges, may now be subject to a phased reduction in benefits, Crisil Ratings said.

The ISTS charge waiver, introduced by the Ministry of Power (MoP) in 2016 and subsequently extended, was instrumental in encouraging renewable energy development.

It enabled solar and wind-rich states like Rajasthan and Gujarat to supply power cost-effectively to demand centres across India.

However, as part of a scheduled phase-down, only projects commissioned by June 30, 2025, would continue to enjoy the full exemption for 25 years.

Projects that are covered under the waiver policy but missed this deadline would be eligible for partial concessions - 75 per cent waiver for those completed by June 2026, 50 per cent for those completed by June 2027, and 25 per cent for those completed by June 2028 after which the waiver will be fully discontinued.

The report further said that "although ISTS charges are typically borne by the offtaker, developers for these capacities may be liable if delays are deemed solely attributable to them".

The reduction in waiver is expected to moderate long-term project cash flow, potentially affecting debt service coverage ratio (DSCR) and project returns.

For instance, if a developer bears 25 per cent of an assumed Rs 0.65/kWh (kilowatt hour) transmission charge due to the waiver sunset, we may see DSCR decline from 1.4 times to 1.3 times, it said.