Govt mulls reduce subsidy by half on rooftop solar projects

With limited funds at disposal and price of solar panels going down, the government has proposed to reduce the subsidy on rooftop projects by half, Parliament was informed on Monday.

"The ministry has proposed to reduce the subsidy on rooftop solar power plants to 15 percent from the present level of 30 percent due to decline in the price of solar panels and limited availability of funds among other things," Power Minister Piyush Goyal said in a written reply in the Rajya Sabha.

Goyal, who also holds charge of Coal and New and Renewable Energy ministries said, the government has set a large target for rooftop solar power plants in the country.

The minister said that there are provisions of concessional import duty or excise duty exemption, accelerated depreciation and tax holiday for setting up grid connected rooftop power plants.

Finance Minister Arun Jaitley, in his Budget speech announced a massive renewable power production target of 1,75,000 mw in the next seven years. Of the total 1,75,000 mw proposed to be tapped by 2022, solar power will have a lion's share of 1,00,000 mw followed by 60,000 mw from wind energy, 10,000 mw biomass energy and 5,000 mw of small hydro projects.

As for the status of clean energy projects in the country, the solar power generation capacity is at about 2,700 MW; Wind - 21,000 MW; Small Hydro - 3,800 MW and biomass - 4,100 MW. At present, renewable energy contributes about 6.5 percent to the electricity mix. It is proposed that this would be taken to about 12 percent in the next three years.