India's 25-Year ISTS Waiver Opens Interstate Hydrogen Hub Model
MNRE granted 25-year ISTS transmission exemptions for green hydrogen projects commissioned by 2030. The waiver changes interstate hydrogen economics and creates demand for sophisticated additionality tracking.
India's Ministry of New and Renewable Energy eliminated transmission costs for green hydrogen projects for 25 years. The ISTS (Inter-State Transmission System) charges, typically 5-8% of levelized cost for hydrogen projects sourcing interstate renewable power, are waived for plants commissioned by December 31, 2030.
Producers can now optimize renewable power procurement from anywhere in India and move hydrogen across states without transmission penalty.
Interstate Hydrogen Hubs
The waiver unlocks the interstate hydrogen hub model. Viable hubs require four things:
- Cheap renewable power (solar-rich regions: Rajasthan, Gujarat, Tamil Nadu)
- Water or electrolyte supply access (coastal regions, industrial corridors)
- Transport infrastructure to move hydrogen to demand centres
- Cost-efficient transmission (now eliminated as a barrier)
Before this policy, transmission costs made multi-state projects unviable. Expect developers to plan Gujarat hubs producing for Maharashtra, Rajasthan producing for Delhi, and Tamil Nadu producing for Karnataka.
The Additionality Tracking Challenge
GHCI additionality requirements mandate that producers track which renewable power source supplies their electrolysers. When renewable power comes from interstate grids — especially now that transmission is free — tracking becomes complex.
A Gujarat hydrogen hub might source power from:
- On-site solar (100% additionality)
- Renewable power from Rajasthan (requires additionality documentation)
- Multiple states simultaneously
Manual tracking does not scale at hub complexity. The combination of interstate sourcing, multiple producers, and GHCI's hourly granularity requirements makes digital compliance infrastructure a practical necessity.
Market Transformation
The ISTS waiver transforms the addressable market:
- Single-site producers become multi-state hub operators
- Regulatory compliance becomes mandatory (ISTS eligibility requires proving GHCI compliance)
- Compliance software shifts from optional to operationally critical at hub scale
Hydrogen hubs are likely to become the dominant production model in India by 2028-2029. State governments are already competing to host them. The companies that can manage the compliance complexity will define how this market operates.
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