The government aims to enhance renewable energy connectivity at the state level.

The Power Ministry is set to encourage states to connect new renewable energy projects to their local grids, rather than the national grid. This move aims to enhance state-level power transmission infrastructure and facilitate the integration of renewable energy capacities across all regions.

Government officials suggest that the current waiver on inter-state transmission system (ISTS) charges for RE projects connecting to the national grid may be revisited in the next financial year. This change would benefit RE project developers, reducing the cost of green energy in India.

As more transmission projects emerge at the intra-state level, the government anticipates increased private investment in state power infrastructure.

In 2019, the Power Ministry had exempted solar and wind power projects from ISTS charges, which are levied on projects connected to the national grid for supplying electricity across India.

Since 2019, the tariff for Renewable Energy (RE) projects has dropped below ₹2, largely due to the waiver on inter-state transmission system (ISTS) charges.

 The Centre has extended this waiver until June 2025 and expanded it to include additional RE sources like pumped hydro, battery storage, green hydrogen, and offshore wind.

The government plans to encourage states to connect new RE projects to their local grids, rather than the national grid, to enhance transmission capacity at the state level.

The Western Region is experiencing a shortage of substations, hindering the connection of upcoming projects to the national grid. This delay also affects the waiver compensation factored into the project tariffs, according to an industry executive.

The cost of connecting to the national grid is substantially higher, at over ₹1.5 crore per unit, compared to ₹80-90 lacs for connecting to the state grid. Estimates suggest that around 20 projects worth ₹80000  crore are planned under the ISTS network. Citing the National Electricity Plan, officials stated that ₹4.7 trillion worth of transmission projects are required by 2027, with ₹4.7 trillion allocated for national-level investments and the remaining for intra-state level investments.

Furthermore, official and industry estimates indicate a need for 35 GW transmission capacity enhancement between West and North, 20 GW each between West and South, and West and East.