The Union Minister of Power, R.K. Singh, has said that the government is likely to consider extending the interstate transmission system (ISTS) charges for renewable projects by at least six months.

The minister was speaking during the CEO’s Interactive Session organized by the Federation of Indian Chambers of Commerce and Industry (FICCI).

In November 2019, the Ministry of Power (MoP) had announced that the ISTS charges and losses on the transmission of electricity generated from solar and wind projects would be waived off as long as they are commissioned before December 31, 2022. This deadline was revised from March 31, 2022, set previously.

Recently NSEFI also asked the Ministry of New and Renewable Energy (MNRE) to extend the waiver of ISTS charges and losses for renewable energy projects. It suggested that the deadline should be extended immediately by a year in light of the ongoing COVID-19 pandemic.

The objective behind the waiver of inter-state transmission charges and losses is to encourage wind and solar energy capacity in the country by reducing the cost of generation, to achieve the target of 175 GW by December 31, 2022.

According to FICCI’s press release, Singh urged the industry to start adding renewable power capacity as the penalty against non-compliance of renewable purchase obligation (RPO) would be stringent in the future. Further, Singh added that the government is looking towards strengthening the local manufacturing units for solar instead of depending on neighboring countries.

In a Mercom webinar session held recently, the former secretary of MNRE, Anand Kumar, had said that the ministry plans to promote domestic solar manufacturing capacity as a large portion of solar equipment is imported from China and abroad. Speaking during the webinar, he added that the government also plans to set up renewable manufacturing and services hubs across the country, to export products and services.

Speaking on the proposed amendments in the Electricity Act, Singh also pointed out that these are essential to make the sector viable and sustainable. The Ministry of Power has issued a draft proposal for the amendment of the Electricity Act 2003 to address contract enforcement, RPO, among other vital issues.

The minister also urged the industry to communicate the importance of these reforms. He added that the sanctity of contracts has to be maintained, and this applies to all parties involved. Failing to do so will result in blacklisting of companies, Singh underlined.

Ranjit Gupta, the chairperson of FICCI Renewable Energy, said that the reforms in the Electricity Act and Tariff Policy are much needed as they will enable foreign investments in Indian companies.

Dilip Chenoy, secretary-general, FICCI, said that the industry will fight the perception issue along with the government and would work towards honoring of contracts by companies.

“The industry will also communicate with stakeholders by way of articles to emphasize the need for reforms in the Electricity Act,” he added.

Notably, the Andhra Pradesh Electricity Regulatory Commission recently expressed disagreements with the government’s proposed amendments to the Electricity Act.