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GoI’s decision to waive off inter-state transmission charges boon for J&K

The ongoing hydropower projects in Jammu and Kashmir will get boost following Union government’s decision to waive off inter-state transmission charges on wheeling electricity for 18 years.

The waiver is already available to solar and wind power projects. The government has set an ambitious plan to have 500 GW of generation capacity from non-fossil energy-based sources by 2030. As per power ministry, this step is expected to provide a boost to the hydro sector, which will also help improve India’s water security and bring development benefits to hilly states namely North Eastern States, Uttarakhand, Jammu and Kashmir, Himachal Pradesh etc. where most of the hydro potential is located.

J&K currently has the capacity to harness about 3500 MW of hydropower and the government is already giving a significant push to generation of hydroelectric power with projects of more than 6300 MW capacity in pipeline for making J&K power surplus. In this regard, five mega hydropower projects – Ratle (824 MW), Kirthai-II (930 MW), Sawalakote (1856 MW), Dulhasti-Stage II (258 MW), and Uri-I Stage-II (240 MW) – with a combined capacity of 4134 MW have been accepted for execution in cooperation with NHPC. These projects are expected to cost Rs.34,882 crore, and when completed, J&K would have an excess of power.

“In a further step to realise the Government of India’s commitment to achieve its power requirement from renewable energy sources, Ministry of Power has issued an order for the waiver of Inter-State Transmission system (ISTS) charges on transmission of electricity generated from new hydro-power projects,” a power ministry release said. Hydropower projects, being clean, green and sustainable will be of paramount importance in our clean energy transition journey. They are also essential for the integration of solar and wind power, which are intermittent in nature, the ministry said.

However, the waiver of inter-state transmission charges, provided to solar and wind projects, had not been extended to hydropower projects. To remove this discrepancy and to provide a level-playing field to hydro projects, the Ministry of Power has now decided to extend the waiver of ISTS charges for new hydropower projects, for which construction work is awarded and PPA (power purchase agreement) is signed on or before June 30, 2025.

The ISTS charges shall be levied for transmission of power from hydro-power projects where construction work is awarded and PPA is signed after June 30, 2025. For the hydropower project whose construction work is awarded and PPA is signed between July 1, 2025, to June 30, 2026, 25 per cent of ISTS charges will be applicable.

The waiver shall be allowed for inter-state transmission charges only and not losses. The waiver would be made applicable from the prospective date.

According to official figures 3100 MW of power projects worth Rs.22315 Cr were revised, accelerated and Memorandum of understanding of 3284 MW of projects worth Rs.29600 Cr were signed. Pakal Dul Hydroelectric Project in Jammu & Kashmir cleared by cabinet for Rs.8,112.12 crore investment will help in reducing power shortage in the northern region.

“Investment of Rs.8,112.12 crore for construction of the (4×250 MW) Pakal Dul Hydroelectric Project has been approved,” an official said. The project would help in reducing the power shortage in the Northern region and partly to utilize storage provisions of the Indus Water Treaty. It would also help in the socio-economic upliftment of remote areas of J&K. 540 MW Kwar project being built at a cost of Rs.4526 Cr would be completed by November 2026.

Notably, in a significant step towards boosting renewable energy projects in J&K, in the Union Budget 2022, an allocation of Rs.476.44 crore has been made as grants towards equity for 800 MW Ratle Hydroelectric Project and Rs.130 crore as grants towards equity for 624 MW Kiru Hydroelectric Project. It will boost energy transition and fight against climate change.

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