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Business News/ Industry / Energy/  Govt to raise subsidy for rooftop solar installation to 60%
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Govt to raise subsidy for rooftop solar installation to 60%

Currently, the government provides a 40% subsidy for rooftop solar installations.

Union finance minister Nirmala Sitharaman had said that the 10 million beneficiaries of the new scheme would be able to get 300 units of free power through the rooftop solar installations,. Photo by Maitreyee HandiquePremium
Union finance minister Nirmala Sitharaman had said that the 10 million beneficiaries of the new scheme would be able to get 300 units of free power through the rooftop solar installations,. Photo by Maitreyee Handique

New Delhi: The government is set to increase the subsidy for rooftop solar installations to about 60% under the new Pradhan Mantri Suryoday Yojana, union minister for new and renewable energy R.K. Singh said on Friday. 

Currently, the government provides a 40% subsidy for rooftop solar installations.

The enhanced subsidy aims to support consumers with electricity consumption below 300 units, typically belonging to economically weaker sections, by making solar installations more affordable without the need for loans.

"For them going and taking a loan is a problem. We intend to increase the subsidy. We will increase the subsidy and probably it will be about 60%. Right now it is 40%. So the subsidy will go up and the (remaining) 40% will still be a loan," he said.

The scheme will be implemented through Special Purpose Vehicles (SPVs) established by central public sector enterprises (CPSEs) designated for each state. 

“They (CPSEs) will set up SPVs for implementing this. They will take the loans. And the excess unit that will be generated, will go to pay off the loan," Singh said, adding that the loan tenure is expected to be up to 10 years.

Post the 10 years when the loan is repaid, the rooftop solar infrastructure would be transferred to the household, which can then sell the excess power to the discoms, said Singh, who also holds the power portfolio.

Presenting the interim budget for FY25 on Thursday, union finance minister Nirmala Sitharaman had said that the 10 million beneficiaries of the new scheme would be able to get 300 units of free power through the rooftop solar installations, resulting in an annual saving of 15,000-18,0000 per year.

Union finance secretary TV Somanathan after the presentation of the budget said that the government has provisioned 10,000 crore for rooftop solar in the budget.

The plan to come up with a new scheme was announced on 22 January by Prime Minister Narendra Modi.

State-run REC will be the implementing agency of the scheme and will lend up to 1.2 lakh crore for the installation of rooftop solar panels.

The scheme comes at a time when the target of rooftop solar installations of the government has not picked momentum. In May last year, the parliament standing committee on energy had said that against a target of 40 GW to be achieved by the end of 2022, only 5.87 GW of rooftop solar projects was installed, which is less than 15% of the target. Currently grid-connected solar rooftop capacity stands at 11.08 GW out of the total solar capacity of 72.31 GW, according to the ministry of new and renewable energy.

Under the government’s energy transition plans, solar power is expected to account for 292 GW out of a total renewable capacity of 500 GW by 2030.

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ABOUT THE AUTHOR
Rituraj Baruah
Rituraj Baruah is a senior correspondent at Mint, reporting on housing, urban affairs, small businesses and energy. He has reported on diverse sectors over the last six years including, commodities and stocks market, insolvency and real estate. He has previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
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Published: 02 Feb 2024, 08:34 PM IST
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