Inter-State Transmission System (ISTS)

According to Crisil Ratings, around 26 gigawatts (GW) of renewable energy (RE) projects in India are expected to be impacted with the end of the waiver on Inter-State Transmission System (ISTS) charges provided for solar and wind projects. This could pose challenges for developers and investors in the renewable energy sector.

What is the Inter-State Transmission System (ISTS)?

The Inter-State Transmission System (ISTS) is a high-voltage power transmission network that plays a crucial role in transmitting electricity across state borders in India. It facilitates the efficient distribution of electricity from power-rich regions to energy-deficient areas.

Key Features of ISTS:

• High-Voltage Network: Operates at voltages above 132 kV, ensuring efficient transmission and minimizing losses over long distances.

• Managed by CTUIL: The system is managed by the Central Transmission Utility of India Limited (CTUIL), a subsidiary of Power Grid Corporation of India Limited (POWERGRID) under the Ministry of Power.

• Grid Stability & Loss Reduction: Helps reduce transmission losses, and contributes to enhanced grid stability, which is essential for ensuring uninterrupted power supply.

• Cross-State Electricity Flow: Connects regions with a surplus power supply (like coastal areas with wind and solar potential) to regions with deficient supply, enabling more balanced and efficient electricity distribution.

• Unified Energy Market: The ISTS system enables the creation of a unified energy market, where electricity can be transmitted across state boundaries to meet demand. This ensures flexibility, and overcomes geographical constraints on power supply.

• Supports Renewable Energy: One of the main advantages of ISTS is that it allows for the transmission of renewable energy like solar and wind power across states, which is crucial for large-scale renewable energy projects.

How Does ISTS Work?

1. Power Generation: Electricity is generated from various sources, including solar farms, wind parks, hydro plants, and thermal stations.

2. Grid Connection: The generated power is transmitted to ISTS substations, which are high-voltage facilities managed by the Central Transmission Utility (CTU). These substations "step up" the voltage to reduce transmission losses.

3. High-Voltage Transmission: The electricity is transported through 132 kV and above transmission lines across multiple states, ensuring minimal energy loss even over long distances.

4. Load Management: Regional Load Dispatch Centers (RLDCs) and the National Load Dispatch Center (NLDC) regulate the flow of electricity to balance supply and demand.

5. Distribution: The power is stepped down at state-level substations and distributed to industries, businesses, and residential areas via local transmission and distribution networks.

Implications of Ending ISTS Waiver on RE Projects

The end of the waiver on ISTS charges could raise the cost of transmitting electricity from renewable energy projects, particularly in remote locations. This will impact projects such as solar and wind farms, which are often located in areas far from major consumption centers. Developers may face increased transmission costs, which could:

• Raise the overall cost of renewable energy generation.

• Affect the financial viability of projects that were initially relying on the waiver.

• Reduce the attractiveness of investments in renewable energy projects.

This could also lead to an increase in electricity tariffs, particularly for consumers relying on renewable energy sources.