In a bid to push solar power tariffs even lower and incentivising as many states as possible to procure electricity from large-scale solar power projects through long-term agreements, the Indian government has extended a crucial incentive linked to inter-state transmission of electricity.

The Ministry of New & Renewable Energy recently announced that solar power projects commissioned by 31 December 2019 will be exempt from paying inter-state transmission charge. The initial deadline to avail this exemption was 30 June 2017.

The exemption is critical for states planning to procure electricity from projects located in others. Several companies are also looking to procure electricity from solar power parks.

The lowest solar power tariff in India currently stands at Rs 2.44/kWh which is cheaper than 92% of the operational coal-based power plants in the country. Apart from the falling module prices, aggressive targets and regulatory measures such as this exemption have played a major role in the steep fall in tariff bids.

The Delhi Metro Rail Corporation (DMRC) has signed a 25-year power purchase agreement with Rewa solar power park located 800 kilometres away. Similarly, Noida Metro and Coal India are also planning to set up solar power parks in Madhya Pradesh. Recently, Uttar Pradesh proposed to set up a 750 megawatt solar park in neighbouring state of Rajasthan.

The extension will also compliment the Green Energy Corridors project undertaken by the Power Grid Corporation of India to facilitate easy transmission of electricity generated from renewable energy projects across India.

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