Recent months have seen significant developments in India's rooftop solar landscape.
In early January, the ministry of new and renewable energy (MNRE) raised the subsidy for solar rooftops from ₹18,000 to ₹20,000 per KW for 1 KW systems. On January 21, the government simplified rooftop solar implementation rules, followed by Prime Minister Narendra Modi's announcement of the PM Suryodaya Yojana on 22 January, enabling one crore households to set up solar panels on their rooftops.
In 2014, the government launched the rooftop solar programme with a cumulative installed target of 40 GW by 2022. This target hasn’t been achieved and only about 10 GW of rooftop capacity has been installed by December 2023. Most of this capacity is by industrial and commercial establishments with the residential category contributing to only about 3 GW. The PM Suryodaya Yojana is another attempt to accelerate efforts to reach the target of 40 GW.
On 13 February, the PM announced the yojana with a new name - PM Surya Ghar: Muft Bijlee Yojana – and some more specifics such as the investment of over ₹75,000 crore to light up 1 crore households and providing up to 300 units of free electricity per month.
On 29 February, the Union cabinet approved the scheme with a total outlay of ₹75,021 crore. The scheme incentivizes rooftop solar installation by providing an increased subsidy of up to ₹30,000 per KW for up to 2 KW and ₹78,000 for 3 KW or higher plus loans at 7%, development of a model solar village for rural areas, payment security for renewable energy service companies (RESCOs) and a fund for innovative projects and a dedicated portal for online registration and availing benefits.
This initiative is poised to enhance clean energy uptake, reduce energy import bill and household electricity costs, and strengthen the power grid. While it ticks almost all the boxes, additional measures are essential to make it more effective and to expedite its implementation.
A major obstacle is the complexity faced by households in installing rooftop solar systems--finding and negotiating with an installer/developer, obtaining clearances from the discom, maintaining the panels and the system. While the MNRE has simplified some procedures, challenges remain in peri-urban and rural areas.
On 25 January, the MNRE allocated states to eight Central Public Sector Enterprises for implementing the rooftop solar targets as renewable energy service companies (RESCOs). REC Ltd will be the monitoring, tracking and financing agency.
The CPSEs will set up the project and provide free electricity to the house as needed and sell the surplus electricity to the respective power discom that can be used to pay off the loan, if any. The solar rooftop system ownership will be transferred to the consumers once the loan is repaid and they will keep earning money from the surplus electricity. However, it is not clear whether the CPSEs continue to have any role in the scheme approved by the Union cabinet.
Another important aspect is economies of scale. Such large-scale deployment must be leveraged to bring down the costs. A centralised bulk procurement from one of the entities mentioned above could enable that and the benefits.
While the procurement and financing happen centrally, implementation happens locally. The interest of the local stakeholders and the development of the local ecosystem becomes critical.
RESCOs can play a central role in developing such an ecosystem by encouraging the creation of local developers. These developers should be responsible for marketing the programme benefits to consumers, sourcing consumer interest and approaching the renewable energy service companies for necessary modules and infrastructure.
The RESCOs help stitch the project together for implementation. The developers can then install the solar panels at consumers’ premises and take responsibility for long-term maintenance. RESCOs can pay the developer a fixed installation fee and yearly maintenance fees. This will create new local energy sector entrepreneurs, aligning with the government’s vision of creating district-level opportunities.
Consumers can agree upon their share of self-use of the electricity generated and sell the balance to the RESCOs (unless bought by the discom), for suitable compensation. The RESCOs can aggregate all such balance electricity and maximize revenue by selling this power to other discoms, large consumers, and power exchanges.
Price arbitrage opportunities - that is the difference between compensation paid to consumers and the realized sale price for electricity– can be used to partially offset the financial assistance provided by the central government. RESCOs also get an incentive to actively participate in the implementation of the program.
The PM Surya Ghar Yojana is an excellent opportunity to scale up the adoption of clean energy as well as create local entrepreneurs and jobs. A suitable implementation structure can go a long way in achieving the desired results.
Nitin Zamre is the COO at The Infravision Foundation. Views are personal.
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11.03.2024
Recent months have seen significant developments in India's rooftop solar landscape.
In early January, the ministry of new and renewable energy (MNRE) raised the subsidy for solar rooftops from ₹18,000 to ₹20,000 per KW for 1 KW systems. On January 21, the government simplified rooftop solar implementation rules, followed by Prime Minister Narendra Modi's announcement of the PM Suryodaya Yojana on 22 January, enabling one crore households to set up solar panels on their rooftops.
In 2014, the government launched the rooftop solar programme with a cumulative installed target of 40 GW by 2022. This target hasn’t been achieved and only about 10 GW of rooftop capacity has been installed by December 2023. Most of this capacity is by industrial and commercial establishments with the residential category contributing to only about 3 GW. The PM Suryodaya Yojana is another attempt to accelerate efforts to reach the target of 40 GW.
On 13 February, the PM announced the yojana with a new name - PM Surya Ghar: Muft Bijlee Yojana – and some more specifics such as the investment of over ₹75,000 crore to light up 1 crore households and providing up to 300 units of free electricity per month.
On 29 February, the Union cabinet approved the scheme with a total outlay of ₹75,021 crore. The........
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