India power grid delays trigger new transmission fee exemptions
India’s power grid is struggling to keep pace with the country’s rapid renewable energy expansion. Delays in electricity transmission infrastructure are no longer affecting only operational renewable plants facing significant curtailment, they are also holding back projects under construction or awaiting commissioning because grid connections are unavailable.
The issue has become serious enough for the Central Electricity Regulatory Commission (CERC) to reintroduce targeted exemptions from interstate transmission charges for eligible renewable energy projects. The proposal is included in the fifth amendment to the 2020 Interstate Transmission System (ISTS) Charges Sharing Regulations, which has now been released for public consultation.
Under the draft rules, projects whose commissioning has been delayed because transmission infrastructure is unavailable would remain eligible for transmission charge exemptions.
India power grid expansion is failing to match renewable energy growth
Like many rapidly expanding clean energy markets, India is experiencing renewable capacity growth that is outpacing investment in grid infrastructure. According to a recent report by European think tank Ember, the country has achieved only around 80% of its annual transmission network targets over the past five years, allowing infrastructure backlogs to accumulate. India is estimated to require at least 61,411 kilometres of additional transmission lines by the 2029-30 financial year.
Part of the challenge stems from administrative procedures, land acquisition issues and disputes over rights of way, together with fragmented land ownership.
“The nature of renewable energy development in India further complicates the situation,” wrote Duttatreya Das, Energy Analyst at Ember. “Rajasthan, within the northern regional grid, and Gujarat, in the western regional grid, host most of the country’s utility-scale solar and wind capacity. This concentration, combined with delays in transmission and distribution infrastructure, is creating long queues at key pooling substations. On average, projects scheduled for commissioning during fiscal year 2026-27 face grid connection delays of four to five months, with some substations in Rajasthan experiencing significantly longer waiting times.”
Between January and March 2026 alone, India was forced to curtail approximately 300 GWh of clean electricity because overloaded networks could not accommodate additional renewable generation.
New transmission charge exemptions for delayed renewable projects
The proposed rules are designed to reduce the financial burden on developers. They apply to solar, wind and hybrid renewable energy projects that sign a Power Purchase Agreement (PPA), Power Sale Agreement (PSA) or any contract governed by India’s Contracts Act by 31 December 2026, provided the agreement has a minimum duration of seven years.
The exemption would cover projects with an original grid connectivity date between 1 July 2025 and 30 June 2028 that have been, or will be, delayed because the required transmission infrastructure is not yet available.
To qualify, projects must achieve Commercial Operation Date (COD) within two months of receiving effective grid access. Where these conditions are met, developers will retain the transmission charge exemption corresponding to their original connectivity date, according to the graduated schedule established by the regulator.
Battery energy storage systems receive longer incentives
The proposal also strengthens support for battery energy storage systems (BESS). Projects already benefiting from transmission charge exemptions would see the incentive period extended from 12 years to 25 years, bringing battery storage into line with solar and wind projects.
The draft regulation also introduces differentiated exemptions based on charging cycles. For example, a co-located BESS would receive a 100% exemption when charging directly from its associated renewable energy source, while a graduated exemption would apply when charging from the grid using electricity generated by other renewable sources.
In addition, electricity purchased through India’s Green Day Ahead Market (G-DAM) would count towards the minimum 51% renewable energy requirement needed to qualify for transmission charge exemptions, provided developers can supply certification confirming that the electricity originated from wind or solar generation.