The Telangana government has issued a draft renewable energy policy aiming to add 51 GW of renewable capacity by the financial year (FY) 2035.

The Telangana Renewable Energy Policy-2024 targets achieving a solar capacity of ~34 GW across grid-scale, floating and distributed renewables, wind capacity of ~4.5 GW, hydropower capacity of ~2.5 GW, and energy storage solutions, including battery energy storage system (BESS) and pumped storage projects of ~10 GW by FY35.

The policy also aims to promote the production of green hydrogen and its derivatives.

The Telangana Renewable Energy Development Corporation and/or designated departments such as Telangana Power Generation Corporation, Telangana distribution companies (DISCOMs), Transmission Corporation of Telangana (TRANSCO) and the Department of Municipal Administration and Urban Development will be treated as designated nodal agencies.

The draft policy stipulates that projects must be completed within two years from the issue of capacity allocation or power purchase agreement.

In case of projects are not completed within  the stipulated time, the nodal agency will provide a one-year extension by encashing 50% of the performance bank guarantee (PBG) and another one-year extension by encashing the remaining 50% of the PBG. Projects not commissioned beyond the two-year extension will be canceled.

For government land, a nominal lease fee of 10% of market value/ annum at the prevailing rate will be set for the duration of the power purchase agreement. There will be an escalation of 5% every two years. In such cases, the district collector will enter into a lease agreement upon commissioning of the project.

Telangana TRANSCO/DISCOMs will process the technical feasibility of projects within 30 days of receiving the application.

The nodal agency will set up an online portal for registration of solar projects and single-window clearance.

Solar

The Telangana government will procure solar power from projects set up by women’s self-help groups. DISCOMs will procure the solar power as per the feed-in tariff set by Telangana Electricity Regulatory Commission. Developers must set up projects between 500 kW and 2 MW. They will also be responsible for the power evacuation costs up to the DISCOM interconnection point and metering at the interconnection point.

The government will also pool rooftop space in government schools and offer it to industries to develop rooftop solar projects. Under this, a percentage of free energy will be provided to the government school, and the rest will be utilized for captive consumption / open-access sales.

Floating Solar

For floating solar projects, the DISCOMs may issue tenders with no legal restrictions to procure solar power. Alternatively, water bodies may be allotted to state public state undertakings (PSU), central PSUs, or joint ventures between state PSUs and/or central PSUs on a nomination basis for floating solar projects.

The DISCOMs will compensate the irrigation department by giving energy share/nominal annual leases.

The developer must enter into a project agreement with the nodal agency within two months of the capacity allocation.

Wind

Open access/captive wind projects must be completed within three years from the issue of capacity allocation.

Pumped Storage Projects

For pumped hydro storage projects, government land will be provided for a nominal lease for a period of 45 years.

In the case of private land, the nodal agency will acquire the private land and provide it to the developer at a nominal lease of ₹1 (~$0.011)/hectare/annum.

The project must be completed within six years from the date of allocation by the nodal agency.

BESS Projects

BESS projects must be commissioned within one year from the date of capacity allocation, with a one-year extension provided by encashing PBG.

Renewable energy projects within a hybrid power project must be configured to operate at the same point of grid connection. In the case of repurposing existing renewable energy projects, if already granted transmission connectivity is being used, additional transmission capacity charges will not be levied.

Electric Vehicle Charging Stations

The state nodal agency will evaluate and develop public charging stations under the public-private partnership model.

It will integrate renewable energy supply for electric vehicle (EV) charging stations. DISCOMs will promote daytime EV charging by introducing Time-of-Day (TOD) tariffs. A separate EV tariff category will have TOD and dynamic tariff mechanisms for charging point operators (CPO). Land for CPOs will be offered at ₹1 (~$0.011)/kWh, and the nodal agency will charge project management agency fees.

All new permits for commercial complexes, housing societies, and residential townships with a built-up area of 5,000 sq.mt and above will mandate charging stations. Public parking spaces will also require charging stations.

Incentives

• Private agricultural land can be converted to non-agricultural status to set up renewable energy projects.
• In case of the sale of renewable energy power to DISCOMS, supervision charges will be waived.
• 100% reimbursement will be given for net state goods and service tax (SGST) for all the materials/ equipment needed.

All state projects selling power to DISCOMs will be classified as industries and will be provisioned to receive incentives under industry policy:

• 15% reimbursement will be given on the investment for the projects, limited to ₹ 2 million (~$23,318.4) for micro and small enterprises
• 100% reimbursement will be given for the stamp duty charge
• 50% reimbursement will be given for the costs incurred for quality certification, limited to ₹200,000 (~$2331.84) for micro, small, and medium projects
• 10% of machinery cost will be provided, which shall be deducted later from investment subsidy for 1st generation entrepreneurs
• Loan interest subsidy will be provided between 3% and 9% on term loans for 5 years.

Green Hydrogen

Telangana plans to position itself as a major player in producing cost-effective green hydrogen by establishing large-scale projects. The state government will provide various supportive incentives for green hydrogen production projects across the value chain.

Incentives

• For setting up green hydrogen, green ammonia, and green methanol projects, the government will provide a 25% capital subsidy of up to ₹10 million (~$116,594)/MW on project and equipment costs of electrolyzer stack.
• Projects with a minimum capacity of 150 KTPA of green hydrogen will be eligible for subsidy. Such subsidy will be applicable only for the first ten projects or up to 1.5 MTPA capacity.
• All incentives provided under green hydrogen, green ammonia, and green methanol are also available for projects that produce sustainable aviation fuel derived from green hydrogen and its derivatives.

• The government will give a 20% capital subsidy on fixed capital investment on the desalination project for green hydrogen and its derivatives subject to a maximum of ₹10 million (~$116,592)/MLD.  It will be paid to the developer over five years.
• To encourage the development of green hydrogen hubs, the state government will provide 25% of the cost up to ₹100 million (~$1.16 million) in addition to central financial assistance. Any applicable fee for such land conversion will be exempted. The incentives will be disbursed over five years.
• Telangana government will reimburse the developer 100% of net SGST revenue from the sale of green hydrogen and its derivatives within the state for five years from project commissioning.
• Industrial water will be provided at the doorstep of the manufacturing facility, and there is a 25% exemption of the applicable industrial water charges for five years.
• 50% of intra-state transmission charges will be exempted for five years from project commissioning for the power procured from renewable energy (with or without storage) projects located within the state subject to a maximum of ₹1.5 million (~$17,488.8)/MW per year of installed electrolyzer capacity.
• The state government will provide an exemption of cross-subsidy surcharge for green hydrogen production and its derivatives for five years.
• 100% exemption on additional surcharge for five years.
• 100% reimbursement on electricity duty for the power consumed to produce green hydrogen and its derivatives from renewable energy projects.
• In the case of renewable energy procurement for green hydrogen production, DISCOMs must only pay the cost of procurement and wheeling charges. The state commission may ask to pay a small margin.

Incentives for Electrolyzer Manufacturing

The minimum size of the project must be 500 MW of electrolyzer production per annum, and the subsidy will be applicable only for the first five projects or up to 3,000 MW capacity.

• The government will reimburse the developer 50% of the net SGST revenue for five years.
• 100% reimbursement of electricity duty for five years from project commissioning of manufacturing of electrolyzers.
• Power tariff will be reimbursed at ₹1 (~$0.011)/kWh for five years.
• Industrial water will be provided at the doorstep with a 25% exemption of the applicable industrial water charges for 10 years.

Incentives For Green Hydrogen Refuelling Stations

• A capital subsidy of 25% on fixed capital investment for hydrogen refueling projects for the first ten units must be paid to the developer over five years from the project’s commissioning.
• The government will provide reimbursement of 100% net SGST for the purchase of machinery for refueling stations for five years from project commissioning.

In December 2024, The Telangana Electricity Regulatory Commission issued a comprehensive procedure for verifying the status of captive power generating projects and their associated captive users within the state.

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