Indian Power and New and Renewable Energy Minister RK Singh says the government will encourage rooftop solar adoption by lower- and lower-middle-class households in urban areas with 60% subsidy under the Pradhanmantri Suryodaya Yojana (PMSY).
It will be a 20% increase from the current limit of 40% for the residential rooftop solar segment.
For residential installations in the Northeast and hilly states, the central financial assistance will be 10% more, covering 70% of the total project cost. The target households will be those with less than 300 units of energy consumption, stated the minister while speaking to reporters of local media recently.
The minister estimates the current cost of 1 kW of a rooftop solar system at around INR 50,000.
The balance amount will be loaned under a 10-year tenure, under the recently announced PMSY scheme that aims to solarize 10 million homes in the country (see Rooftop Solar Systems For 10 Million Homes In India).
A special purpose vehicle (SPV), in association with private companies, will be set up by the central public sector enterprises (CPSE) designated for each state, which will implement the same. These CPSEs will take and repay the loan, Singh explained
The CPSE will set up the project and provide free electricity to the house, and the surplus will be sold to the respective power distribution company. The proceeds from this sale will be used to pay off the loan. The CPSE will then exit by handing over the system to the households.
On completion of loan repayment, consumers will own the systems and earn money from the sale of electricity, he added.
REC Limited has been designated as the implementing agency of the scheme. It will be empowered to lend up to INR 1.2 lakh crore ($1.44 billion) to install solar panels.
As is the case with other government-run and assisted solar projects in India, the use of locally produced panels and other systems will be a positive for domestic manufacturing.
Indian Finance Minister Nirmala Sitharaman, while announcing the Interim Budget for 2024-25, said the rooftop solarization scheme PMSY will enable beneficiary households to obtain up to 300 units of free electricity/month. It will entail savings of INR 15,000 to INR 18,000/year (see Rooftop Solar Highlighted In India's 2024-25 Interim Budget).
Considered a laggard solar segment, India's residential rooftop solar segment is expected to thrive under PMSY, especially since the country is targeting around 280 GW of solar power capacity out of the 500 GW non-fossil fuel power generation capacity by 2030.
According to Singh, the uptake of rooftop solar has been low due to a lack of awareness among people, but with the CPSEs taking on themselves to set up the system, it will speed up installations in this segment.