Finance Minister Nirmala Sitharaman’s interim Budget day speech reiterated a plan by Prime Minister Narendra Modi to supply power to one crore households in the country using rooftop solar panels. This would help households save ₹15,000 annually, the Minister claimed. What is known so far is that households that have a monthly electricity consumption of less than 300 units a month will be able to install a mid-sized system (1-2 kilowatt) with the government bearing the expense. This could mean a minimum outlay of ₹1 lakh crore. As of today, rooftop solar systems are subsidised up to 40%, with the remainder having to be borne by the consumer. Under the proposed policy, the subsidy will increase to 60% and the rest will be financed by a private developer who is affiliated to a public sector enterprise connected to the Power Ministry. This will ostensibly ensure quality in installation and also reliable service. There is a mechanism of ‘net-metering’, wherein surplus electricity produced by households can be sold back to the grid to make good the loan, though the actual way in which this is implemented can be quite complex. A monthly consumption of 300 units is paltry in houses where air conditioners and heaters are a given, but by national standards, is a significant metric of consumption. About 80% to 85% of 25 crore to 30 crore households in India use between 100 units and 120 units of power a month on average. Therefore, finding one crore houses that will be eligible for the plan will not be a difficult task.
The major difference from earlier solar promotion policies is that it is the Centre, as opposed to the State power distribution companies (discoms), that will be pushing for solarisation. India’s discoms, most of which are heavily loss making, have had little incentive so far in moving high-consumption customers to decentralised solutions, such as rooftop solar. Given that such discoms have the best granular information about power supply at the household level, by-passing them will not be a successful strategy. The Centre’s push to give visibility to a hitherto laggard programme is welcome. After all, the move towards decarbonised power will be half-hearted if it does not involve households. So far, only 12 gigawatt (GW) out of an intended 40 GW of rooftop solar panels has been installed. Here too, household rooftops account for only 2.7 GW with the rest being commercial or building units. The Centre’s move can thus galvanise a subsidiary domestic industry of solar panels — the subsidies will not be available for imported panels — and must be tweaked in a way to be more accommodative to States. Else, there is a real risk that much of the challenges that have impeded previous initiatives will resurface.
