Policy shift adds financial strain on clean energy sector, threatening progress toward 500 GW renewable energy target by 2030. Here we bring answer to some critical questions around the Inter-State Transmission Waiver:-
WHAT: A crucial subsidy that previously waived inter-state transmission charges for renewable energy projects in India has officially ended, causing concern across the clean energy industry. As of July 1st, 2025, newly commissioned solar and wind projects will now have to pay 25% of the inter-state transmission cost, with charges set to increase further under a federal regulatory plan.
WHO : The decision by the federal power regulator affects all new renewable energy developers in India. Key voices from the sector, including Subrahmanyam Pulipaka, CEO of the National Solar Energy Federation of India, have raised concerns about the financial implications reports the Deccan Herald. State governments like Karnataka are now reassessing their energy procurement strategies.
WHEN: The change came into effect on Tuesday, July 1st, 2025. Projects commissioned after this date will no longer benefit from the transmission fee waiver.
WHERE : The impact will be felt across India, particularly in states that were previously popular hubs for renewable installations—such as Rajasthan, Gujarat, Maharashtra, Tamil Nadu, and Karnataka—due to their favorable geographic conditions.
WHY: The government aims to reform the transmission pricing structure to encourage more localized energy production and reduce over-dependence on central transmission corridors. However, the move comes at a time when the sector is already dealing with high power tariffs and insufficient long-term purchase agreements.
HOW: With the removal of the transmission waiver, tariffs for renewable power could rise by ₹0.40 per kilowatt-hour—a potential 16% increase over the lowest auction rates in FY 2025. Developers fear this will make power purchase agreements harder to secure, particularly for projects already auctioned but not yet operational.
The withdrawal of the inter-state transmission fee waiver is poised to reshape India’s renewable energy landscape. While it may promote decentralized, state-led project development, it also adds cost pressures that could hinder the deployment of nearly 30 GW of upcoming clean capacity. Unless counterbalanced by new incentives or reforms, this policy shift may slow down India’s path toward its ambitious target of 500 GW of renewable energy installations by 2030.