ISTS Full Form, ISTS Charges and the Renewable Waiver Phase-Down Explained

Transmission rarely makes it into a boardroom conversation about electricity, yet it sits inside every unit a business buys. When the power comes from a generator in another state, the cost of moving it across the national grid is one of the lines that decides whether a renewable supply arrangement works.

That is why the ISTS waiver has mattered so much. For close to a decade it removed inter-state transmission charges from new solar and wind projects, and it is now stepping down to zero on a published schedule. This page explains what the ISTS is, who runs it, how its charges are set and shared, and exactly where the waiver stands — with the instrument and the date behind each point.

What is the full form of ISTS?

ISTS stands for Inter-State Transmission System. The term comes from the Electricity Act, 2003, which defines it by function rather than by voltage.

Three things follow from that definition. First, a line does not have to cross a state border to be part of the ISTS — a line inside one state counts if it is incidental to inter-state flow or is built or controlled by the Central Transmission Utility. Second, everything else is intra-state: the Act defines an intra-state transmission system simply as any transmission system other than an inter-State one. Third, the difference decides which regulator sets the charge. Inter-state transmission is regulated by the Central Electricity Regulatory Commission (CERC); intra-state transmission by each State Commission.

Who plans, builds and runs the inter-state network?

The ISTS is a shared piece of national infrastructure, and each part of it has a named owner. For the wider picture of the institutions involved, see how India's power sector is structured.

The network these institutions run has grown quickly. Transmission lines at 220 kV and above crossed five lakh circuit kilometres on 14 January 2026, and 84 transmission projects had been awarded through tariff-based competitive bidding by the end of 2025, 74 of them commissioned. That build-out is what has allowed renewable capacity in resource-rich states to reach buyers elsewhere.

What are ISTS charges, and who pays them?

ISTS charges are the regulated charges that recover the cost of building and running the inter-state network. The licensees' revenue is fixed by CERC; the question the regulations answer is how that fixed total is divided among the network's users.

The current method is set by the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020, notified on 4 May 2020 and in effect from 1 November 2020. They have been amended four times, most recently on 26 June 2025. Under them, the total is built up from four components:

The users who pay are called designated ISTS customers. The charges fall mainly on drawee customers — distribution companies and large consumers who take electricity out of the network — largely in proportion to the network access they hold, with one part allocated by actual use of the network. The rates are computed monthly and published in rupees per megawatt per month.

Since 1 October 2023, the quantity that access is measured in has been set by the CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022. General network access (GNA) is defined in those regulations simply as “open access to the ISTS granted under these regulations”. A distribution licensee or a bulk consumer connecting directly to the ISTS with a load of 50 MW and above can apply for it in its own right.

How do ISTS charges reach a business's electricity cost?

There are two routes, and most businesses sit on the first.

• Buying from your distribution company. Your distribution company pays ISTS charges for the power it brings in from other states. Those charges become part of its approved cost of supply, and reach you inside your tariff. They do not appear as a separate line on your bill.
• Buying renewable power from another state through open access. Here the inter-state transmission charge becomes a line in the landed cost of the power you contract, alongside the state-level charges for using your own state's network. This is where the waiver matters most, because it can remove that line for the life of the arrangement.

The state-level charges on the second route — wheeling, the surcharges, banking and standby — are a separate subject, set by your State Commission, and are covered in the open access guide in this series.

What is the ISTS waiver, and why was it introduced?

The ISTS waiver is a policy under which inter-state transmission charges are not levied on the power from qualifying renewable projects, for 25 years from commissioning. It began with Ministry of Power orders for solar in September 2016 and for wind in June 2017, and has been extended several times since. The key features are these:

• What it covers. The Ministry's order of 23 November 2021 applies to solar and wind power that is “self consumed or sold to any entity either through competitive bidding, power exchange or through bilateral agreement”. That means the waiver is not limited to sales to distribution companies — captive use and bilateral supply to businesses qualify too.
• What it does not cover. The same order states that the waiver “is allowed for ISTS charges only and not losses”, with an exception for projects whose bidding was completed by 15 January 2021. Transmission losses are still borne in energy terms.
• Why. When the Ministry extended the full waiver to projects commissioned up to 30 June 2025, its announcement said the order “will be a boost to renewable energy and also a step forward to achieve the targets of Government of India in meeting the international obligations towards climate change”, and, of a parallel extension for renewable power traded on the exchanges' green markets, that it was “expected to encourage the RE trade in the Power Exchanges”.

The waiver has been one of the clearest examples of policy bridging today's energy needs with tomorrow's clean solutions: it lowered the cost of moving renewable power from the states best placed to generate it to the states where demand sits.

How is the ISTS waiver being phased down?

Rather than ending on a single date, the waiver steps down by a quarter each year for solar, wind and wind-solar hybrid projects. The schedule is now in CERC's regulations: Regulation 13 of the Sharing Regulations, as amended on 26 June 2025, sets it out by date of commercial operation.

Two points are commonly misread. The waiver is fixed by the commissioning date and then held for the full 25 years — a project that earned 100 per cent in 2025 keeps 100 per cent; it does not step down with the schedule. And the step-down applies only to projects still to be commissioned: those already running keep the band they earned for the rest of their 25 years.

Does the waiver apply beyond solar and wind?

Yes. Separate cut-off dates apply to other technologies, most of them for storage and for newer forms of clean energy:

Two details matter most here. For battery energy storage, the co-located period is 12 years, not 25, under the regulations in force today. And for wind energy in India, the offshore schedule runs seven and a half years behind the onshore one: full waiver to 31 December 2032, reaching zero after 31 December 2035.

What changed in 2026?

Two developments, and only one of them is in force.

• The April 2026 memorandum. A Ministry of Power office memorandum dated 16 April 2026 addressed solar and wind projects that were ready but could not commission on time because the transmission they depended on was not yet available. It extends the existing bands to those projects, keyed to their firm start date of connectivity rather than their commissioning date, for projects that held a firm power purchase agreement on 31 March 2026 and commission within a set period of the transmission becoming available. It did not change the band percentages or the 30 June 2028 end date.
• A draft CERC amendment. In July 2026 the Commission published a draft Fifth Amendment to the Sharing Regulations, which would build that relief into the regulations and revise some storage provisions. It is a draft. Until it is notified, the regulations in force are the text of 26 June 2025.

Both sit alongside the Commission's wider work on connectivity for projects awaiting network capacity, including the Commission's one-time connectivity order of July 2026.

Who actually benefits from the waiver, and who pays for it?

Transmission still has to be paid for. A waiver changes who pays, not whether the network's cost is recovered. CERC's minutes on the waiver, dated 31 May 2024, put it plainly: “Waived ISTS charges are required to be billed to the drawee DICs since the total ISTS Transmission charges of the ISTS licensees are to be recovered in full.”

The same minutes size the reallocation at roughly 7 per cent of the national monthly transmission charge in April 2024. That is a system-level figure — general market context, not a cost that applies to any one buyer.

On the other side of the ledger, the Ministry's April 2026 memorandum records that the benefit of the waiver accrues to procurers rather than to renewable developers, because procurers are the ones responsible for paying ISTS charges. That matters for anyone reading the waiver as a subsidy to independent power producers: as the Ministry frames it, the value flows to whoever buys the power.

What should buyers and investors take from the phase-down?

The waiver's step-down is a policy working as designed: a published schedule, set years in advance, that lets the market plan around it. For the people reading it, a few practical points follow.

1. The commissioning date is now a commercial variable. For any new inter-state renewable supply, the band a project falls into — and so the transmission line in the landed cost — depends on when it reaches commercial operation. Delivery timelines carry more weight than they did when the waiver was flat.
2. The waiver sticks to the project, not the contract. A buyer contracting with an older project may be buying electricity that carries a larger waiver for many years. Ask which band the generating project sits in.
3. Transmission losses were never waived. Budget for them in energy terms whatever the band.
4. Check whether the waiver is passed through. Because the benefit accrues to the procurer, the structure of the power purchase agreement decides how it is shared. It is a line to read, not to assume.
5. Watch for the notified version of the draft amendment. It may change the storage and delayed-project provisions, though not the headline band.

Transmission planning and network access are led by the transmission utilities and the Commission, and the waiver has been one of the tools that let India's renewable build-out grow faster than it otherwise could. As it tapers, the national task stays the same — navigating energy security while accelerating the low-carbon transition — with the cost of the network recovered from all its users on a common basis. For context on how procurement has adapted to date, see how utility renewable tenders have evolved.

Frequently asked questions

What is the full form of ISTS?

Inter-State Transmission System. It is defined in Section 2(36) of the Electricity Act, 2003 and covers lines that carry electricity between states, across an intervening state, or within a state on a system built, owned, operated, maintained or controlled by the Central Transmission Utility.

What is the difference between ISTS and intra-state transmission?

ISTS carries power between states and is regulated by CERC. The intra-state transmission system (InSTS), largely owned and run by each State Transmission Utility, covers everything else, and its charges are set by each State Commission.

Is the ISTS charge waiver still available?

Yes, on a reducing scale. Solar, wind and hybrid projects commissioned between 1 July 2026 and 30 June 2027 get a 50 per cent waiver for 25 years. It falls to 25 per cent for projects commissioned from 1 July 2027 to 30 June 2028, and ends after that.

Does the ISTS waiver cover transmission losses?

No. The Ministry of Power's order of 23 November 2021 limits the waiver to ISTS charges, not losses, except for projects whose bidding was completed by 15 January 2021.

Is the ISTS waiver available for power sold to businesses?

Yes. The waiver covers solar and wind power that is self-consumed or sold to any entity through competitive bidding, a power exchange or a bilateral agreement, not only sales to distribution companies.

What is the ISTS waiver for battery storage?

Under the regulations in force, battery storage co-located at the same ISTS substation as a renewable plant and charged from it gets a 100 per cent waiver for 12 years if commissioned by 30 June 2028. Other battery storage gets the same step-down by commissioning date as solar and wind, but for 12 years rather than 25.

Who pays ISTS charges?

Designated ISTS customers, mainly the distribution companies and bulk consumers who draw power from the network, largely in proportion to the network access they hold. CTUIL bills and collects the charges on behalf of the transmission licensees.

What is GNA in electricity?

General Network Access — defined by CERC as open access to the ISTS granted under its 2022 connectivity and network access regulations, in effect since 1 October 2023. It is the quantity against which ISTS charges are now shared.