New Delhi, July 4 -- The government's recent decision to reduce inter-state transmission incentives for renewable energy (RE) from sources like solar and wind is a timely step to reduce distortion in the bills of states that use India's arterial inter-state transmission system (ISTS). Thus far, states using ISTS wires for non-RE supplies more than RE-like Rajasthan and Gujarat, which are both big RE producers-have ended up paying higher bills.

On the other hand, states like Jharkhand and Odisha, which generate plenty of coal-fired electricity but use that network to import large RE volumes, have had to pay less. The revision of a policy aimed at widening RE access will push states to look beyond the low hanging fruit of supply from RE-ri...