When a battery in Rajasthan sells power to a buyer in Maharashtra, that power rides the national grid — the ISTS (inter-state transmission system) — and there is a charge for using it. The ISTS waiver simply switches that charge off. It is one of the quieter policy levers in Indian storage, but on a project that moves power across states it can be worth more than the entire margin on a tender.
The waiver is not new to renewables, but the Ministry of Power (MoP) has been steadily tightening it while carving out generous, longer-running terms for storage. Understanding which side of that line your project falls on is now a real economic decision.
What the ISTS charge is, and why waiving it matters
Every unit of power that crosses a state boundary on the central grid normally pays a transmission charge plus losses. Depending on distance and the transmission zone, that runs from roughly ₹1 to ₹2.30 per unit on inter-state renewable flows. For a storage project selling firmed power across states, the waiver removes that layer entirely — industry estimates put the saving at around ₹0.50 to ₹1.50 per kWh, improving the transmission component of project economics by 20% to 60%.
That is not a subsidy on the battery itself — for that, see our companion pieces on BESS subsidies in India and the VGF scheme. The ISTS waiver instead cuts the operating cost of delivering the power, unit after unit, for the life of the exemption. For a system built to sell renewable firming across states, that recurring saving often decides the bid.
Which storage projects qualify
The MoP notification of 10 June 2025 extended a full 100% ISTS charge waiver to two clear categories, provided the power is consumed outside the state where the project sits:
- Pumped-hydro storage (PSP) — projects awarded for construction on or before 30 June 2028.
- Co-located BESS — a battery connected to the same ISTS substation as its associated renewable-energy project, commissioned on or before 30 June 2028.
The waiver for these projects then runs for a long horizon from commissioning — reported at roughly 12 years for BESS and 25 years for pumped hydro — so it is not a one-year sweetener but a durable feature of the cashflow.
The important design point: the benefit is anchored to storage that is charged from renewable energy. A co-located battery qualifies because it stores clean generation rather than grid power. The rules also allow a limited contingency drawal from the grid so the battery is not stranded when renewables are unavailable, with that grid drawal reported to be capped at around 10% of the battery’s annual energy requirement. A pure standalone BESS charged mainly from the grid does not sit in this favoured 100% category and instead follows the general ISTS orders and CERC (Central Electricity Regulatory Commission) rules.
The deadline and the graded phase-down
The headline date is 30 June 2028. Qualifying storage commissioned on or before that date locks in the 100% waiver; projects commissioned after it get nothing. For solar and wind — including storage that leans on grid power — the MoP does not switch the waiver off overnight but steps it down year by year, so later commissioning keeps progressively less of the exemption.
For the general renewable category, the remaining waiver is reported as 75% for projects commissioned by 30 June 2026, 50% by 30 June 2027, 25% by 30 June 2028, and zero thereafter. In other words, every year of delay in commissioning erodes the saving — a strong nudge to build early. The flip side, why MoP is winding it down at all, is cost-shifting: the waiver’s burden falls on everyone else’s bills, and that socialised cost has risen from roughly 4 paise to about 7 paise per non-renewable unit as renewable flows have grown.
What it means for your numbers
Put simply: if you are structuring a co-located solar-plus-storage or wind-plus-storage project for inter-state sale, the ISTS waiver is often the difference between a competitive bid and an unviable one, and the 30 June 2028 commissioning gate makes timing everything. The saving compounds with a solar-BESS or wind-BESS build where the battery genuinely charges from co-located generation.
What this means for you
- Developers and IPPs: design co-located, RE-charged storage and target commissioning well inside the 30 June 2028 window to secure the full 100% waiver; do not assume a standalone grid-charged battery gets the same treatment.
- DISCOMs and buyers: the waiver is a real reason inter-state firmed-storage tariffs look attractive today — but factor in that the general phase-down will lift the delivered cost of later, non-qualifying projects.
- Anyone modelling a bid: the waiver is an operating-cost saving worth roughly ₹0.50–1.50 per unit, so it belongs in your per-kWh landed-cost calculation, not just your capex.
Storage policy in India moves by notification, and the exact waiver percentages, deadlines and eligibility conditions are periodically amended by the MoP and CERC — always verify the current provisions before you commit to a bid or financial close. If you want to size the waiver’s impact against your own project’s flows and distance, our team can help you model it — see how the numbers move with our BESS savings calculator or talk to us directly.
Policy snapshot as of July 2026. Terms change by notification; verify current provisions before financial decisions.