As part of a renewed thrust to increase adoption of household rooftop solar systems (h-RTS) via the Pradhan Mantri Suryoday Yojana, the Centre will effectively bear the entire cost of setting up such systems for households that consume less than 300 units of electricity per month. This could potentially cost at least ₹1 lakh crore and in a departure from the existing approach to h-RTS, it will see central government companies – as opposed to the current set up of individual state-run power distribution companies – taking on the responsibility of powering beneficiary households.
Finance Minister, Nirmala Sitharaman in her Budget Speech on Thursday said that one crore households will be enabled to obtain up to 300 units free electricity every month which would translate to benefits of ₹15,000-18,000 annually for households. Prime Minister, Narendra Modi, announced the scheme following the consecration ceremony at Ayodhya last month.
Free installation
For implementation, public sector units of the Power Ministry, such as the National Thermal Power Corporation (NTPC) will be charged with identifying in States, households that consume less than 300 units per month. This won’t be challenging as about 85% of Indian households, on average, use 100-120 units a month. This done, they will install RTS with eligible householders having to pay effectively nothing. “60% of the cost of installation will be subsidised by the Centre. For the rest, the PSU will take a loan (from a bank) and will repay from the cost of electricity (used by the household) over and above the 300 units. You as a householder pay nothing,” RK Singh, Minister for Power and New and Renewable Energy, said in an interaction on Friday. Households with a consumption over 300 units can use the scheme. However, they would be required to fund the 40% themselves via a loan or self-financing. “It’s still a great scheme because it would pay itself back in 7-10 years after which you can sell electricity back to the grid and earn,” he added.
Each public sector unit will be tasked with reaching out to specific states. They will form special purpose vehicles (SPV) with private companies to execute the programme. The solar electrification scheme will rely entirely on solar panels and systems made in India to give a fillip to local manufacturing.
₹50,000 per kw
There is as yet no budgetary outlay specified for the scheme. However back-of-the-envelope calculations suggest that electrifying one crore households, could cost atleast ₹1.5 lakh crore. A 2-3 kilowatt (kw) system is sufficient to draw a minimum 300 units, for a household. Currently it costs about ₹50,000 per kw, said Mr Singh, implying a ₹150,000 capital cost per household. The Budget documents suggests that only ₹4,555 crore has been allotted this year for the scheme but being an interim Budget, this could change, and Mr. Singh said that “all necessary funds required for the scheme would be provided.” There is as yet no deadline for the scheme. However, India currently has 6.7 lakh households, Mr. Singh reported, with rooftop solar systems. Reaching one crore households is thus an exponential expansion. “It will not take many years; it is not a straight-line progression. Uptake has been low so far because people so far were unaware on how to install RTS. From now on, people (PSU) will reach out to those households (<300 units). The speed of installation will go up 4-5 times faster.”
Currently household rooftop solar installations are only about a quarter of the nearly 12 GW (1 GW is 1000 megawatt) rooftop solar installations. The Centre had committed to achieving RTS installations worth 40 GW by 2022 but hasn’t met that target. Among the reasons cited are that the scheme currently relies on state discoms providing such installations and the large subsidies available on supplied electricity as well as low consumption of electricity in the majority of Indian households. While this hikes up the cost of solar power, de-centralised electricity from RTS systems, potentially takes away paying consumers from discoms who have high monthly consumption. To be sure, most household solar systems – across the world -also have back-up grid-based electricity.
