ISTS Charges Waived for Hydro PSP and Co-Located BESS Projects Till June 2028

Introduction

To promote India’s clean energy transition, the Ministry of Power has extended its support for Energy Storage Systems (ESS) by waiving Inter-State Transmission System (ISTS) charges on a conditional basis. As part of a series of supportive reforms, the latest order—dated June 2025—builds upon earlier directives issued in 2021, 2022, and 2023. ISTS Waiver Energy Storage clarifies the waiver policy for Hydro Pumped Storage Projects (PSPs) and Battery Energy Storage Systems (BESS), especially those co-located with renewable energy (RE) sources. These measures are designed to encourage faster commissioning, lower costs, and increase interstate power flow from storage facilities.

Key Highlights of the ISTS Waiver Order

100% Waiver for Hydro PSP Projects

Projects that award construction work on or before June 30, 2028
Will receive 100% exemption from ISTS charges
This applies regardless of commissioning date—as long as construction starts before the cut-off

100% Waiver for Co-Located BESS Projects

Co-located BESS projects commissioned on or before June 30, 2028
Eligible only if power is consumed outside the commissioning state
Co-location means both BESS and RE projects are connected to the same ISTS substation

No Waiver Post-June 2028

Hydro PSP projects with construction work awarded after June 30, 2028 will not get any ISTS charge waiver
Similarly, co-located BESS projects commissioned after June 30, 2028 are not eligible for waiver

Non-Co-Located BESS Projects

These projects will follow existing provisions under earlier Ministry of Power orders and CERC regulations

What Is Co-Located BESS?

A BESS project is considered co-located if:

It is situated with a renewable energy (RE) project
Both systems are connected to the same ISTS sub-station

This design enables simultaneous operation and better grid management, which the government now incentivizes through full ISTS charge waiver.

Benefits to Developers and States

Encourages faster commissioning of energy storage projects
Reduces transmission costs, enhancing project viability
Promotes inter-state electricity transfer from storage facilities
Supports grid balancing and RE integration into the national grid
Enables cost-competitive green hydrogen and ammonia production, which depend on low-cost renewable power

Implementation & Compliance

Project developers should:

Ensure BESS and RE infrastructure are connected at the same ISTS node
Award Hydro PSP contracts before June 30, 2028
Plan for inter-state power delivery to qualify for exemption
Track changes to CERC regulations and MoP notifications to stay updated

State DISCOMs, transmission companies, and renewable energy agencies must align with the updated waiver framework when evaluating project proposals.

Conclusion

This forward-looking move by the Ministry of Power reaffirms India’s commitment to affordable and scalable clean energy infrastructure. By extending ISTS charge waivers to both Hydro PSP and co-located BESS projects till June 30, 2028, the policy creates an enabling environment for investment in next-generation energy storage. Developers and stakeholders must act promptly to avail these financial benefits and contribute to national energy goals.

Download: ISTS Waiver Energy Storage Projects Get 2028 Deadline