State participation, consumer awareness key to rooftop solar scheme's success, say experts

PM Modi renamed the new rooftop solar scheme as ‘PM Surya Ghar: Muft Bijli Yojana’.

The success of the rooftop solar scheme launched by Prime Minister Narendra Modi in February will hinge on participation by state governments as well as awareness among consumers, say energy experts.

The PM Solar scheme or PM Surya Ghar: Muft Bijli Yojana aims to install rooftop solar panels on 1 crore houses in India. The government has announced an investment of over Rs 75,000 crore for the scheme, which would provide up to 300 units of free electricity a month to a household.

“While there is an incentive for a household, particularly in the rural areas, to opt for such a scheme as it can lead to savings of Rs 15,000-20,000 per year, the key aspect for successful implementation here is the role of the state power distribution entity,” said Suman Chowdhury, Chief Economist and Head of Research at Acuite Ratings & Research. “The rooftop needs to be connected to the grid so that whatever and whenever power is generated, it’s delivered to the grid.”

“On the other hand, the household will continue to tap the grid based on its own demand pattern. The distribution entity will need to develop proper systems and metering to also track the quantum of power that is generated and supplied by the grid,” Chowdhury added. “State distribution companies should be given targets for rooftop installations, and they can tie up with solar panel integrators to install and maintain such rooftops in the targeted households at a reasonable cost.”

On February 13, the prime minister renamed the new rooftop solar scheme as ‘PM Surya Ghar: Muft Bijli Yojana’. A residential rooftop solar scheme was already in place, and it has now been upgraded with new guidelines and incentives. The Ministry of New and Renewable Energy (MNRE) launched the old ‘Rooftop Solar Programme Phase-II’ in 2019 to achieve 4,000 MW of rooftop solar capacity in the residential sector by providing subsidies or central financial assistance.

The experts added that the challenge for the new government in successfully implementing the scheme also remains in consumers getting the required approvals to install the system. “The challenge is the implementation of the scheme in terms of consumers getting approvals from discoms, the availability of quality service providers for installation and maintenance services, and consumer awareness. Though the awareness part has been addressed, implementation of the scheme at the state level is also required,” said Vikram V, Vice President and Co-Group Head of Corporate Ratings, ICRA.

The main upside of the new solar policy is the increased subsidies, which are at least 67 percent higher from the previous rooftop solar scheme, said experts. The minimum subsidy for anyone installing a 1-kW rooftop solar system under the new scheme will be Rs 30,000, an increase from Rs 18,000 earlier. For those installing a 2-kW system, the new subsidy will be Rs 60,000, compared with Rs 36,000 (Rs 18,000 per kW) earlier.

However, consumer awareness will be the main driver in increasing the use of solar rooftops in households across the country.

“…the success of the scheme’s implementation will hinge on consumer interest, which is a function of information dissemination, procedural ease and cost economics. Consumer awareness and effective implementation of state-level policies by distribution companies would be critical in increasing the pace of project installations,” said Sehul Bhatt, Director-Research at CRISIL Market Intelligence and Analytics. “Therefore, energy and cost payback awareness among Tier 2 and 3 cities would be vital, coupled with a further potential increase in the subsidy share for quick rooftop installations.”

“Further, an improvement in the incentive outlay over the Rs 750 billion announced until fiscal 2026 could aid in timely installations,” Bhatt added.