The Union Ministry of Power has permitted renewable energy (RE) projects originally tendered with Inter-State Transmission System (ISTS) connectivity to connect through the State Transmission Utility (STU) or Intra-State Transmission System (InSTS), provided that both the renewable energy generation project and the power procurer are located within the same state. The decision is expected to help optimize transmission costs and make renewable power procurement more economical for state utilities and distribution companies (DISCOMs).
The policy decision follows a representation submitted by the National Solar Energy Federation of India (NSEFI), which highlighted the potential benefits of allowing such projects to use intra-state transmission networks. After examining the proposal, the Ministry of Power recognized that transmitting electricity through the intra-state network, where generation and consumption are within the same state, can significantly reduce transmission-related costs. The proposal was subsequently approved by the competent authority.
Under the revised arrangement, renewable energy developers will have the flexibility to use STU or InSTS connectivity instead of relying exclusively on the ISTS network for eligible projects. This change is particularly relevant for renewable energy projects developed to supply electricity to procuring entities or DISCOMs operating within the same state. By enabling power transmission through the state’s existing network infrastructure, the decision could improve cost efficiency and support more economical renewable energy procurement.
However, the Ministry has clarified that the regulatory requirements of the respective State Electricity Regulatory Commissions (SERCs) and Joint Electricity Regulatory Commissions (JERCs) must be followed. Since electricity procurement at the intra-state level falls under the jurisdiction of these regulatory authorities, project developers and procuring utilities will need to obtain the necessary approvals for their Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs) when adopting InSTS connectivity.
The Ministry has also directed that appropriate provisions be included in future renewable energy bidding documents. These provisions are intended to facilitate the adoption of intra-state transmission connectivity in cases where renewable energy generation and power consumption take place within the same state. This will help establish a clearer framework for developers, procurers and implementing agencies during the tendering and project development processes.
Copies of the official communication have been circulated to major power sector stakeholders, including NTPC, NHPC, SJVN and Solar Energy Corporation of India (SECI), along with the Central Electricity Regulatory Commission (CERC) and relevant state regulatory authorities.
The decision marks an important step towards improving transmission cost efficiency in renewable energy procurement. It also provides greater flexibility in connectivity arrangements while encouraging states to utilize their transmission infrastructure more effectively for renewable energy development.
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