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					</table>Nearly a year after the Ministry of Power (<a href="https://powermin.gov.in/" target="_blank" rel="noopener">MOP</a>) extended the timeline and <a href="https://mercomindia.com/ists-charges-levied-solar-wind/" target="_blank" rel="noopener">widened</a> the scope for waiver of the interstate transmission system (ISTS) charges for renewable energy projects, the expected surge in the open access solar market has not materialized because the Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/">CERC</a>) has not included the provisions in relevant amendments.
This has caused uncertainty for developers leading to slow progress in some projects. An executive from an open access developer said, &#8220;Developers are in a fix. If they build their projects based on the MoP order, they could suffer if CERC decides not to incorporate them. But if projects are held back until CERC&#8217;s regulations are finalized, we might not have enough time to avail 100% ISTS waiver.&#8221;
So far, CERC has released a draft amendment to the Sharing of Inter-State Transmission Charges and Losses (First Amendment) Regulations, 2022, but it does not include the developer-friendly provisions laid out in last November&#8217;s MoP order.
In stakeholder comments, MoP <a href="https://cercind.gov.in/2022/draft_reg/Sharing-Regulations_Amend-2022/MOP-Additional-comments.pdf" target="_blank" rel="noopener">wrote</a> to CERC earlier this month, &#8220;It is observed that the proposed supplementary amendment also is not in line with the provisions regarding waiver of transmission charges as per aforesaid MoP orders.&#8221; The letter noted that the ministry had written to CERC in August as well, urging it to include the provisions of its order in the regulations.
Emphasizing the scale of uncertainty over projects, another industry source said, &#8220;Developers are building close to 1 GW of ISTS projects in Rajasthan. They have also received the connectivity for it, but the regulatory uncertainty is holding back the projects from going ahead full steam.&#8221;
The ISTS charges waiver offers significant cost benefits to open access consumers. A commercial and industrial (C&amp;I) unit stands to save around ₹0.50 (~$0.006)/kWh in ISTS charges when procuring renewable power. For a C&amp;I consumer with a 50 MW requirement, the ISTS charges could be over ₹70 million in a year, assuming the unit runs for 8 hours a day for 365 days.
Power Ministry&#8217;s Order on ISTS Waiver
MoP&#8217;s order last year encouraged capacity addition through ISTS open access projects by bringing in private investment. The ministry extended the commissioning date for solar and wind energy projects by two years to June 30, 2025, as an eligibility criterion to avail of ISTS charges waiver for 25 years. Further, pumped hydro storage projects and battery energy storage systems (BESS), along with solar and wind energy, were also included in the waiver.
While the earlier ISTS charges waiver was applicable only for DISCOMs procuring power through competitive bidding, the ministry&#8217;s order extended it for captive use, power exchanges, and bilateral agreements.
The ISTS charge waiver is contingent on the commissioning time and progressively reduces every year. Projects commissioned by June 30, 2025, can avail of a 100% waiver on the ISTS charges. From then on, the extent of waiver declines progressively, as illustrated in the chart below &#8211;
<img loading="lazy" decoding="async" class="aligncenter wp-image-43551" src="https://mercomindia.com/wp-content/uploads/2022/10/ISTS-Charges-Chart.png" alt="ISTS Charges Chart" width="600" height="176" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/10/ISTS-Charges-Chart.png 680w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/10/ISTS-Charges-Chart-300x88.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/10/ISTS-Charges-Chart-650x191.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/10/ISTS-Charges-Chart-624x184.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/10/ISTS-Charges-Chart-600x176.png 600w" sizes="(max-width: 600px) 100vw, 600px" />
Boost to ISTS-connected Open Access 
The ISTS charges waiver allows C&amp;I consumers another power procurement option on the table. For instance, many consumers based in Industrialized states with expensive land, like Haryana and Maharashtra, would prefer third-party solar open access from projects in Rajasthan or Gujarat. But ISTS charges make it prohibitive for them.
The current model of solar open access is almost entirely limited to captive/group captive or third-party projects developed in the same state where the C&amp;I consumers are based.
&#8220;Currently, Delhi Metro is the only C&amp;I consumer for inter-state open access as it buys power from the solar park in Rewa in Madhya Pradesh,&#8221; a source said. However, developers say that many consumers, especially those with large energy requirements, are looking at the ISTS open access option.
The open access arrangement saves C&amp;I consumers from high distribution companies (DISCOM) charges, especially the cross-subsidy component. The intra-state model could be restrictive due to the scarcity of land or investment required for building captive units.
Consumer interest in ISTS open access projects is reflected in the recent announcement by <a href="https://mercomindia.com/amazon-solar-power-purchase-agreements-420-mw-india/" target="_blank" rel="noopener">Amazon</a>, which roped in three developers for 420 MW solar projects in Rajasthan.
Industry sources said that apart from resolving the prevailing uncertainty, the state governments must reform their ISTS regulations to maximize the open access opportunity. &#8220;Very few states have open access projects. And where open access projects are present, the interstate policies are not impactful enough to make any difference to the business,&#8221; another developer added.
Large solar parks that provide power to other state DISCOMs have been the mainstay of solar capacity addition in India. The ISTS charges waiver for bilateral and captive projects aims to provide a cheaper source of renewable power for the industry, promote private investment in the sector and unlock large capacity additions.
&#8220;Nothing kills investments like uncertainty. Unfortunately, delays in decision-making fester uncertainty and bog down growth, which has become all too common in the solar industry. The industry needs decisions to be taken swiftly on pending regulations and issues to remove bottlenecks and provide confidence to investors,&#8221; said Raj Prabhu, CEO of Mercom Capital Group.

CERC Yet to Act on ISTS Charges Waiver for Open Access Renewables Proposed by Ministry of Power

In a recent order, the Delhi Electricity Regulatory Commission (<a href="http://www.derc.gov.in/" target="_blank" rel="noopener">DERC</a>) stated that waste to energy generation projects in the national capital territory (NCT) of Delhi will be exempted from certain applicable open access and deviation charges for intra-state scheduling purposes of procurement from these projects.
The exemptions will be applicable for the useful life of the existing projects. It will also apply on future projects commissioned on or before March 31, 2022, and also on those for which the power purchase agreements (PPAs) have been signed on or before March 31, 2022.
The Delhi commission has stated that waste to energy projects in the NCT will be exempted from wheeling charges, transmission charges, regulatory asset surcharge, pension trust surcharge, and cross subsidy surcharge on the sale of electricity within the NCT under open access regulations.
The DERC has also exempted the waste to energy projects from any commercial or financial implication in case of deviation from the scheduled power under the deviation settlement mechanism from the date of the commissioning of the project.
According to the order, the actual generation from waste to energy projects will be treated as scheduled generation. An existing project with a PPA cannot terminate it in order to avail these exemptions.
In its order, the commission stated, “The purpose of waste to energy is to dispose the waste and divert from dump for protecting the environment. Such projects will also aid the objectives of Swachh Bharat Mission as well as Namami Gange Mission through conversion of waste to energy. Moreover, the quantum of waste to energy generated is minimal and has extremely limited operational precedence.”
<a href="https://mercomindia.com/delhi-power-development-fund-transmission/" target="_blank" rel="noopener">Recently</a> , the DERC issued draft regulations which state that the transmission systems in the region that are aimed at easing congestion in intra-state transmission systems can now receive funding from the Power System Development Fund of Delhi.

Waste to Energy Projects in Delhi to be Exempt from Open Access Deviation Charges

The Solar Energy Corporation of India (<a href="http://www.seci.co.in/" target="_blank" rel="noopener">SECI</a>) has invited trading licensees to participate in a tender for providing support services to facilitate the trading of power at SECI, New Delhi. The bid‑submission deadline is December 11, 2017.
Barred from participation are technical and financial joint ventures (JVs) as well as consortiums of companies. In addition, only Category I or Category II trading licensees registered by the Central Electricity Regulatory Commission (CERC) are allowed to participate in the tender.
The successful bidder (a trading licensee) will be required to provide an adequate amount of skilled manpower that meet the necessary qualifications and have relevant experience – including experience handling inter-state power trading – to handle the various responsibilities involved in trading transactions.
The selected trading licensee will be responsible for managing SECI’s control room and all power scheduling related activities. The trading licensee will be responsible for complying with the CERC’s regulations and norms for power trading and will also assist SECI in its compliance, wherever required.
The initial contract period will last two years, with the option for a year-long extension available based on the satisfactory performance of the contractor (trading licensee).
SECI has said that if the power trading control room must be shifted to another place in India, that the trading licensee will then discharge its services at the new premises at no additional cost to SECI. The trading licensee would also be responsible for assisting SECI in developing the required infrastructure at the new location.
SECI’s latest move is a novel idea. SECI conducts most of India’s renewable energy auctions and, in many cases, it is also the PPA signatory. Estimates from the Ministry of New and Renewable Energy (MNRE) show that under the SECI’s viability gap funding (VGF) program 400 MW of operational solar projects under NSM Phase-II, Batch 2 are for Interstate operations; another <a href="https://mercomindia.com/seci-tenders-750-mw-solar-bhadla-solar-park-leverage-ists-waiver/" target="_blank" rel="noopener">750 MW</a> of solar has been tendered under the NSM Bhadla-UP program; and <a href="http://mercomcapital.com/seci-invites-tenders-to-set-up-1000-mw-of-interstate-transmission-system-connected-wind-projects" target="_blank" rel="noopener">1,000 MW</a> of wind power has been tendered. All three of the tendered projects will have the ability to conduct interstate operations in order to ensure that 100 percent of their capacity can be carried out.
If all projects are allocated and get commissioned within 13 months of the signing of the PPAs in their present form, then the total quantum of annual energy transactions (for 2,150 MW) – assuming a 19 percent capacity utilization factor (CUF) for the solar/wind projects – can be estimated at approximately 3,578 million units.
This latest tender could create an avenue for SECI to profit if all of the trading is done transparently and professionally.
According to <a href="https://mercomindia.com" target="_blank" rel="noopener">Mercom India Research</a>, SECI has also tendered another <a href="https://mercomindia.com/seci-tenders-1000-mw-ists-connected-wind-projects-tranche-ii/" target="_blank" rel="noopener">1,000 MW</a> of ISTS-connected wind power projects under Tranche-II in Jun 2017, and received a winning low bid of <a href="https://mercomindia.com/wind-becomes-competitive-solar-tariff-drops-record-low-%E2%82%B92-64-kwh/" target="_blank" rel="noopener">₹2.64 (~$0.0413)/kWh</a> quoted in an October 2017 auction.
In <a href="https://mercomindia.com/waiver-period-inter-state-transmission-charges-losses-solar-projects-extended-december-31-2019/" target="_blank" rel="noopener">June 2017</a>, the waiver period for ISTS charges and losses for solar projects was extended to December 31, 2019.

SECI Issues Tender to Facilitate Interstate Solar and Wind Power Trading

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