Inter-State Transmission Waiver for Energy Storage Projects Extended by Three Years
On 10th June 2025, the Ministry of Power (MoP) extended the Inter State Transmission System (ISTS) transmission charge waivers for Battery Energy Storage System (BESS) and Pump Hydro Storage (PHS) projects by three years until June 2028. The 100% waiver will apply to co-located BESS projects commissioned by June 2028. Alternatively, for PHS, the mandate is for projects that have awarded their construction work before the specified timeline. The announcement comes amid deliberation and requests from industry stakeholders to extend the ISTS waivers for all renewable energy projects.
Figure 1: ISTS transmission charge waiver trajectory of various green energy technologies
Source: MoP, JMK Research
The extension aims to support the deployment of grid-scale energy storage, which is crucial for the evolving Indian power grid, especially as the penetration of variable and intermittent renewable energy sources increases rapidly. Currently, the grid-scale energy storage (ESS) sector in India is in its early stages, with around 90% of the cumulative ESS tendered capacity issued within the last couple of years (since 2023). Most of these tenders are location-agnostic, promoting inter state transmission system utilization. Removing the waivers at this point could have hindered the development of a nascent and untapped market.
Although the MoP order has been well received by the industry, a few aspects still require further clarification.
- Firstly, the requirement for co-locating BESS with solar and wind projects makes standalone BESS ineligible for the waiver extension, which may affect the long-term growth potential of this important segment of the grid-scale ESS market.
- Secondly, restricting the eligible ESS technologies to only battery and pump hydro systems may discourage the advancement of other promising energy storage technologies on the horizon, such as gravity and thermal energy storage.
Despite the minor shortcomings, the ISTS transmission charge waiver extension is expected to enhance the economic viability of ESS projects in India, making them more appealing to investors and developers. Additionally, it aligns with the government’s directive to include a minimum of 2-hour co-located ESS (equivalent to 10% of the installed solar project capacity) in future solar tenders. Potential savings on transmission charges, estimated between Rs 1 to 2 per unit, are likely to be a key factor in accelerating the growth of the grid-scale ISTS market, ultimately helping India achieve its renewable energy (RE) and energy storage (ESS) targets by 2030.