Quick Facts
What ISTS charges are
ISTS (Inter-State Transmission System) charges are fees paid for using India’s inter-state high-voltage transmission network. The network connects state-level distribution systems across India’s national grid, operated primarily by Power Grid Corporation of India Limited (PGCIL).
ISTS charges cover:
Power Grid’s capital investments in transmission infrastructure (lines, substations, switchgear).
Operations and maintenance of the inter-state network.
A regulated return on Power Grid’s capital.
Losses in the inter-state transmission system.
Generators selling power across state boundaries pay ISTS charges. Consumers receiving inter-state power (through open access or utility purchase) also pay through their tariff.
For solar, the ISTS waiver introduced in 2021 has been a significant policy tool. Solar and wind generators commissioned within the waiver window pay no ISTS charges, supporting inter-state renewable deployment.
Why the ISTS waiver matters
Without ISTS waiver, inter-state solar economics were challenging:
Solar plant in Rajasthan with 2.5 per kWh PPA tariff.
ISTS charges to deliver power to consumer in Maharashtra: about 1.0 to 1.5 per kWh.
Effective cost to consumer: 3.5 to 4.0 per kWh.
This was competitive but not dramatically better than local generation.
With ISTS waiver:
Solar plant in Rajasthan with 2.5 per kWh PPA tariff.
ISTS charges: waived (0).
Effective cost to consumer: 2.5 per kWh.
This is dramatically better, enabling corporate open-access deals across states.
The waiver has enabled large-scale corporate solar contracts where the generating site is in high-irradiance Rajasthan or Gujarat and the consuming site is in commercial states like Maharashtra or Karnataka.
ISTS waiver structure
The waiver applies to:
Solar and wind generators commissioned within the eligibility window.
For the duration of their PPA term (typically 25 years).
For both bundled and merchant power sales.
For both onshore and offshore wind.
The waiver does NOT eliminate:
Intra-state transmission charges (regulated by state SERCs).
Wheeling charges (DISCOM distribution network).
Cross-subsidy surcharge.
Other state-level open-access charges.
For a typical inter-state solar transaction:
ISTS charges: 0 (waived for eligible projects).
State transmission: 0.30 to 0.80 per kWh.
DISCOM wheeling: 0.30 to 1.00 per kWh.
Cross-subsidy surcharge: 1.00 to 2.50 per kWh (state-dependent).
Other charges: 0.10 to 0.30 per kWh.
Total open-access charges (excluding ISTS): 1.70 to 4.60 per kWh.
The ISTS waiver alone is meaningful (0.50 to 1.50 per kWh saved), but state-level charges remain significant.
Eligibility for ISTS waiver
Specific eligibility depends on:
Commissioning date: Within the announced window.
Technology: Solar PV, solar thermal, wind.
Source: Within India.
PPA structure: Various structures qualify; new generation typically qualifies.
For specific projects, verifying eligibility requires:
Reviewing the latest Ministry of Power notifications.
Checking the project’s commissioning date against the waiver window.
Confirming the waiver applies to the specific PPA structure.
Lender’s technical advisors typically confirm ISTS waiver eligibility as part of project diligence.
ISTS waiver and corporate solar
The waiver has been a key enabler for corporate solar in India:
Without waiver: A corporate buyer in Maharashtra paying about 11 per kWh retail tariff would see about 7 per kWh effective solar tariff (PPA + transmission + wheeling + CSS).
With waiver: The same buyer sees about 6 per kWh effective solar tariff.
The 1 per kWh saving across multiple gigawatts of corporate solar contracts has accelerated India’s renewable deployment.
Major Indian corporates with multi-state solar deals (Reliance, Tata, Mahindra, ITC, Wipro, Infosys, and others) have benefited from the ISTS waiver structure.
Calculation of ISTS charges (without waiver)
When ISTS charges apply, CERC’s framework determines them:
Power Grid’s transmission revenue requirement is approved by CERC.
The cost is allocated to generation injection points and drawal points across India.
Specific point-of-injection (POI) and point-of-drawal (POD) charges are notified.
For a typical inter-state transaction:
POI charge at the generator’s substation: typically 0.20 to 0.60 per kWh.
POD charge at the consumer’s substation: typically 0.30 to 0.90 per kWh.
Total ISTS charges: 0.50 to 1.50 per kWh.
The actual rates depend on geographical distance and grid congestion.
ISTS losses
In addition to charges, ISTS losses apply:
Inter-state transmission has technical losses (about 3% to 5%).
The losses are allocated to consumers per CERC formula.
A consumer receiving 100 kWh of inter-state power pays for about 103 to 105 kWh at the generator end.
The ISTS waiver typically includes losses (the consumer pays only for the energy delivered).
ISTS waiver duration and policy direction
The waiver has been extended multiple times:
Original deadline: 30 June 2025 (for solar plus wind hybrid).
Extended for solar: typically to 30 June 2025 or later.
Extended for wind: similar timelines.
Future extensions: Government policy direction.
The waiver is a policy tool to accelerate India’s renewable deployment toward the 500 GW by 2030 target. As the target progresses, the waiver may be phased out or modified.
Project developers and consumers should monitor Ministry of Power notifications for the latest waiver status.
Common ISTS mistakes
Treating ISTS waiver as permanent. The waiver has been extended but may eventually expire.
Forgetting state-level charges. ISTS waiver does not eliminate wheeling, CSS, or other state-level charges.
Mismatching commissioning timing. Late commissioning may miss the waiver window.
Not verifying eligibility. Specific project structures may not qualify.
Confusing ISTS (inter-state) with intra-state transmission. Different charges, different regulation.
Best practices
For new inter-state solar projects, verify ISTS waiver eligibility with current Ministry notifications.
Plan commissioning timelines to ensure ISTS waiver eligibility.
Include ISTS economics (with or without waiver) in financial models.
Coordinate with Power Grid for inter-state interconnection design and approvals.
For corporate open-access deals, include ISTS waiver in PPA terms and provide protection for waiver continuation.
Monitor Ministry of Power notifications for waiver status changes.
Standards and references
ISTS charges are governed by CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations. Specific notifications from the Ministry of Power and CERC publications detail the waiver framework. Power Grid Corporation publishes transmission tariff orders.
Related glossary terms
- Open Access Solar
- Wheeling Charges
- Cross-Subsidy Surcharge
- Intra-State vs Inter-State
- CTU vs STU
- CERC
- Power Purchase Agreement
Key takeaways
ISTS (Inter-State Transmission System) charges are fees for using India’s inter-state high-voltage transmission network operated by Power Grid Corporation. The Government of India has waived ISTS charges for solar and wind generators commissioned within an eligibility window, with the waiver extended multiple times. The waiver saves typically Rs 0.50 to Rs 1.50 per kWh for inter-state renewable transactions, significantly improving project economics. The waiver does not eliminate state-level transmission charges, wheeling, or cross-subsidy surcharge. The waiver has enabled significant growth in corporate open-access solar across Indian states.