September 16 was a red-letter day for Jagshibhai Suthar, a resident of Gandhinagar in Gujarat. He had Prime Minister Narendra Modi on his rooftop admiring his newly installed solar installation.
“We have installed 3.24 kW (kilowatt) solar panels on the terrace and now our [electricity] bill has been reduced to zero. Additionally, I have received a credit of ₹248 in the bill,” he told The Hindu.
Mr. Suthar is a beneficiary of the PM Surya Ghar: Muft Bijli Yojana (PMSY), a ₹75,000 crore, Centre-led scheme to install at least one crore rooftop solar installations (RTS) across India. The scheme is the latest iteration of a push by governments for at least two decades to coax more households to install such RTS. Apart from encouraging use of fossil fuel-free electricity, more RTS means that fewer people are dependent on electricity distribution companies — which are in deep debt in many States — for their power needs.
Subsidised systems
The PMSY scheme provides for a subsidy of 60% of the solar unit cost for systems up to 2 kW capacity and 40% of additional system costs for systems between 2 kW and 3 kW capacity. The subsidy has been capped at 3 kW capacity. At current benchmark prices, this means a ₹30,000 subsidy for a 1 kW system, ₹60,000 for 2 kW systems, and ₹78,000 for 3 kW systems or higher.
As of August 2024, Gujarat leads the States in terms of installed rooftop solar capacity with 4,195 MW, followed by Maharashtra at 2,487 MW, and Rajasthan at 1,269 MW. The rest of the States all have installed capacity in the triple-digits, with a cumulative national capacity of 13,889 MW.
Beneficiaries of the scheme are now a strong support base of the ruling National Democratic Alliance (NDA), a Union Minister said recently during a background briefing on the 100 days of the government.
Gujarat leads States
There are no official estimates of the number of households with RTS in these States, but with average ratings of 3 kW or 5 kW per household the prime target of the PMSY, there are likely to be about 8 lakh to 13 lakh such households in Gujarat, 5 lakh to 8 lakh households in Maharashtra, and 4 lakh to 2.5 lakh households in Rajasthan.
The popularity of RTS in Gujarat received a major fillip in 2019 with the launch of the Surya Gujarat scheme that gave subsidies up to 40% for systems upto 3 kW, comparable to the current PMSY scheme. The State government has received nearly 13 lakh registrations over the last four to five months, officials said.
Indeed, even before the PMSY was launched in February 2024, Gujarat already had an installed RTS capacity of 3,455 MW in an estimated 7 lakh to 10 lakh households as of March 2024, according to data from the Ministry of New and Renewable Energy.
“Gujarat has generally had a favourable environment for solar but following the announcement of the scheme, some surprising trends have emerged. As of June 2024, the maximum number of applications for the PMSY have come from Assam (2.23 lakh) followed by Gujarat (2.1 lakh) and Maharashtra (1.9 lakh). The direct push from the Prime Minister is a major reason for the scheme’s popularity,” said Prabhakar Sharma, senior consultant at JMK Research, who tracks the renewable energy sector.
Loans needed
However, the promise of “zero electricity bills” is not a given for everyone.
“While firm data isn’t available, discussions with vendors — or companies that are installing RTS systems — suggest that nearly 90% of new applicants are availing loans to finance installations. Additionally, another feature was that applicants were opting to install 4 kW to 5 kW system, rather than the 3 kW which was subsidised. So anything above say, 300 units, will be charged,” Mr. Sharma said.
The PMSY envisages RTS households as independent power producers. Thus, all electricity generated from the RTS is connected to the grid. Unless there is a battery back-up (which the scheme does not fund), a scheduled power cut by the distribution company will result in a power cut in RTS households too.
Charges remain
Along with installing an RTS, the State distribution company also installs a meter which calculates the household’s net power consumption. Any usage over 300 units is charged the applicable electricity rates, said Sanjay Kulkarni, who installs RTS systems in Pune. Consumption below 300 units will see consumers being paid by the State at about ₹2 to ₹2.50 per unit.
“Some consumers do see zero bills in some months depending on usage but there are also fixed grid charges that must be paid. In India, accounting for changes in weather, availability of solar insolation varies and will influence consumption. However, over a year or two, there will be a net gain in electricity bills,” Mr. Kulkarni added.
M. Vasan of Andhra Pradesh said that he had taken a bank loan of ₹2 lakh for a 4 kW system and will pay a monthly installment of ₹2,000 a month. “On average, I used to pay about ₹2,500 a month as electricity charges. Since two months, I’m paying ₹800, but the summers [when air conditioner usage is expected] will be the true test,” he said.
Subsidising domestic firms
Satheesh Makam, who installs RTS systems in Bangalore, said that the scheme, while “extremely popular and publicised unlike previous attempts”, was essentially a boon for domestic solar companies. “To avail of the subsidies, only solar panels from domestic, empanelled vendors were eligible. These are actually 30% to 40% more than other panels. So the subsidy is indirectly financing them. It’s a case of give with one hand and take with the other,” he said.
The major difference from previous versions of the scheme is a doubling of the subsidy on rooftop solar (from an earlier ₹14,500 per kW), loans made available at 7% to 9% interest, an online application system, and an anticipated improvement in service delivery.
Collateral-free loans
As the scheme is now envisaged, 12 public sector banks will offer a collateral-free loan (1% above the current prevailing RBI repo rate, now 6.5%) to anyone with a viable roof and grid connectivity who wants to install an RTS. A 3 kW-hour system can generate up to 300 units a month, depending on available sunshine. Currently, an RTS costs about ₹50,000 per kW. A householder can either pay the balance or take a loan. A vendor will appraise the site and then install the system along with an inverter and a smart meter that can switch between grid and solar supply.
Currently, household RTS accounts for only about a quarter of the nearly 12 GW (1 GW is 1,000 MW) rooftop solar installations. The Centre had committed to achieving RTS installations worth 40 GW by 2022 but has not yet met that target
Mr. Suthar received a subsidy of ₹78,000 under the scheme though his total installation cost is around ₹1.59 lakh. He did not take a loan to finance the installation. “Our power bill used to be around ₹3,500 for two months; which means around ₹1,750 per month. But now, we generate average 13 to 15 units of power that’s sufficient as per our consumption,” he said.
Published - September 28, 2024 11:05 pm IST
