How Will ISTS (Inter State Transmission System) Pave the Way for India’s Businesses to Adopt Renewable Energy?
4PEL Staff
February 2023
WHAT IS ISTS?
ISTS or an Inter State Transmission System refers to the transport of electricity generated from any kind of energy sources, across state boundaries through grid transmission lines. This allows areas with abundant energy resources to share their excess electricity with other regions that may have a higher demand for electricity but lack access to energy sources.
When it comes to Renewable Energy, India has set itself an ambitious target to increase the share of non-fossil fuels-based energy electricity to at least 40% or 500 GW, by 2030. However, the future of renewables is largely linked to the health of electricity distribution grids and ISTS plays a crucial role in this transition.
THE GOVERNMENT’s RENEWABLE ENERGY (ISTS) PUSH
In a welcome move to the green energy sector – the government has announced waiver of ISTS charges for Renewable Energy projects commissioned till 2025.
ISTS charges will be levied only on Renewable Energy projects commissioned after 30th June 2025, that too in a phased manner. The Centre will levy 25% of the applicable ISTS charges on projects commissioned between 1st July 2025 and 30th June 2026. The charges will be increased by 25% annually, and 100% of ISTS charges will be levied on RE projects commissioned after 1st July 2028. These waivers will be applicable for 25 years from the dates of commissioning.
Waiver on ISTS charges for RE projects is all set to be a gamechanger and accelerate India’s adoption of clean energy. Moreover, it will contribute to the long-term energy security of the country and also promote ecologically sustainable growth. It is a welcome move for the C&I sector as it will enable companies, both large and small reduce their overall carbon footprint by switching to renewables, irrespective of their geography of operations.
HOW WILL COMPANIES BENEFIT FROM PROCURING RENEWABLE ENERGY VIA ISTS?
- Cost-Effective Energy Solutions through Government Waivers
- By signing up for ISTS, companies can reduce energy costs by 20-50% annually, and improve competitiveness of the company by declaring access to sustainable energy solutions.
- The ISTS waiver would help reduce net landed cost for consumers by ₹0.70 (~$0.0094) – ₹0.80 (~$0.011)/kWh.
- Improved Energy Security: The ISTS network has a capacity of over 60,000 MW, which ensures a consistent supply of energy to meet the growing demand, thus reducing the risk of energy shortages and power disruptions.
- Enhanced Corporate Reputation: Companies that adopt sustainable energy solutions, such as those provided by ISTS, can enhance their corporate reputation, and attract customers who prioritize environmentally friendly practices. (According to a survey by Nielsen, 66% of consumers are willing to pay more for products from companies committed to sustainability).
- Access to Renewable Energy Certificates (RECs): Companies can access Renewable Energy Certificates (RECs) provided by CERC, by signing up for ISTS, which helps declare their offset of carbon footprint and improve their sustainability credentials.
| Parameters | Intra - State | Inter - State (CTU) |
|---|---|---|
| Landed Tariff | Dependent on state policy from time to time | No state-specific incentives; ISTS charges waived off |
| Settlement Period | Typically states have at least monthly banking or more | 15 min time block settlement |
| Banking of Unutilised Power | Allowed upto a month | Consume in real time |
| State Regulatory Interference | Applicability of banking, settlement and overhead charges are linked to State Regulations | No; except determination of Captive Status |
| Alternate Arrangements for Shortfall/Surplus Power | Since, there is no standard market available, alternate arrangements are difficult to arrange | Standard OTC market available |
| Grid Code | State Grid Code | Indian Grid Code |
| Nodal Agency for Scheduling of Power | SLDC | RLDC |
| Contract and Process Robustness | Less robust due to State regulations and policies | More robust as connectivity, scheduling and settlement process are same throughout the country |
FOURTH PARTNER ENERGY’S OPEN ACCESS SOLAR & WIND ENERGY FOOTPRINT
Fourth Partner Energy is India’s leading Renewable Energy solutions company – with a vast network of Solar, Wind and Hybrid parks across the country. 4PEL has over 900 MW of installed off-site capacity and is the ideal partner of choice for your business to switch to renewable energy. We now offer Open Access solutions via ISTS as well. To know how our clean energy solutions can help your business save on costs, while cutting down your Carbon footprint, visit www.fourthpartner.co and chat real-time with our RE agents.