The Ministry of Power has issued an order introducing amendments to the waiver of Inter-State Transmission System (ISTS) charges for Energy Storage Systems (ESS). This directive comes as a partial amendment to several preceding orders (dated November 23, 2021, November 30, 2021, December 1, 2022, December 6, 2022, May 29, 2023, and June 9, 2023) and was issued on June 10, 2025.
Energy storage systems are increasingly recognized as indispensable for managing the intermittency of renewable sources like solar and wind, ensuring grid stability, and providing reliable power supply, especially during peak demand periods. The financial viability of large-scale ESS projects often hinges on the costs associated with transmitting electricity across state borders. By addressing these ISTS charges, the Ministry of Power seeks to significantly de-risk investments in this infrastructure.
The new provisions introduce specific incentives and deadlines for different types of energy storage technologies:
Hydro Pumped Storage Projects (PSPs)
Hydro PSPs, known for their large-scale, long-duration storage capabilities, play a vital role in grid balancing. The order stipulates a 100% ISTS charges waiver for Hydro PSP projects, provided that their construction work has been formally awarded on or before June 30, 2028. This stringent deadline creates a strong impetus for developers to expedite the initiation of these capital-intensive projects. Conversely, any Hydro PSP project for which the construction work is awarded after June 30, 2028, will unfortunately not be eligible for any ISTS charges waiver, signaling a clear policy transition and a focus on accelerating near-term development.
Co-located Battery Energy Storage System (BESS) Projects
Battery Energy Storage Systems offer flexible and rapid response capabilities crucial for real-time grid management. The Ministry has announced a 100% ISTS charges waiver for co-located BESS projects commissioned on or before June 30, 2028. A key condition for this waiver is that the power discharged from such BESS projects must be consumed outside the state where the BESS project is commissioned. This particular clause aims to encourage inter-state energy flow and optimize resource utilization across the national grid. The order precisely defines “co-located” as a BESS project and its associated Renewable Energy (RE) project being connected at the same ISTS sub-station, promoting integrated renewable energy generation and storage solutions. Similar to Hydro PSPs, co-located BESS projects commissioned after June 30, 2028, will not be eligible for this specific ISTS charges waiver.
Non-co-located BESS Projects
For Battery Energy Storage System projects that are not geographically co-located with renewable energy generation at the same ISTS sub-station, the ISTS charges waiver framework will continue to operate as per the existing orders issued by the Ministry of Power and the regulations set forth by the Central Electricity Regulatory Commission (CERC). This ensures continuity for a broader range of BESS deployments, albeit without the specific, time-bound 100% waiver offered to co-located systems.
Implications for India’s Energy Sector
This amendment is poised to enhance the economic viability of energy storage projects in India, making them more attractive to investors and developers. By mitigating a substantial portion of transmission costs, the government is providing an incentive to accelerate the deployment of ESS. This acceleration is critical for integrating higher penetrations of variable renewable energy into the grid, ensuring stability, reducing curtailment, and ultimately leading to a more reliable and greener power supply for the nation.
