End of ISTS charge waiver may impact 26 GW of renewable projects: Crisil

Around 26 gigawatt (GW) of under-construction renewable energy capacity could be affected by the expiry of the full waiver on inter-state transmission system (ISTS) charges for solar and wind projects, according to Crisil Ratings. The exemption period ended on June 30, 2025.

The Ministry of Power introduced the ISTS charge waiver in 2016 to promote renewable energy development, particularly enabling states such as Rajasthan and Gujarat to supply power cost-effectively to high-demand regions. The scheme allowed projects commissioned by June 30, 2025, to retain a full exemption for 25 years.

Projects completed after the deadline will receive reduced benefits: a 75 per cent waiver if commissioned by June 2026, 50 per cent by June 2027 and 25 per cent by June 2028, after which the scheme will end entirely.

Crisil Ratings said these projects, all of which have signed power purchase agreements (PPAs), face potential moderation in cash flow. The delays in their commissioning have been linked to procedural, regulatory and infrastructure-related issues. With the waiver ending, they will now be subject to a phased reduction in benefits.

Crisil Ratings noted that although ISTS charges are generally borne by the offtaker, developers may need to cover them if delays are solely their responsibility. The report warned that the reduction could weaken project cash flows, debt service coverage ratios (DSCR) and returns. For example, if a developer bears 25 per cent of an assumed INR 0.65 per kilowatt-hour transmission charge, DSCR could drop from 1.4 times to 1.3 times.