Solar Subsidy in India
Solar Subsidy in India
To boost the usage of solar energy in the residential sector, India has a solar subsidy program in place. It reduces the financial burden of installing solar panels, by providing financial assistance to consumers. With this incentive, residential consumers can save up to 40% of their installation cost. Moreover, individuals from across the country can apply for these grants. But how much is the incentive and how can individuals claim it? Let’s understand it further.
Central Financial Assistance
At the end of 2022, the Indian government announced that it was implementing the Rooftop Solar Program Phase Under the scheme, the Ministry of New and Renewable Energy (MNRE) will provide Central Financial Assistanceto residential consumers for installing rooftop solar systems (RTS).
The program will be implemented by DISCOMs and respective state agencies. The best part about the CFA is that it offers direct benefit transfer (DBT), i.e. consumers will directly receive the incentive in their bank accounts.
Who is the CFA for?
Currently, CFA is available to residential consumers with a grid-connected solar plant. Moreover, group housing societies and RWAs of solar capacities up to 500kW can also avail the incentive.
MNRE has set certain stipulations that have to be met to avail the subsidy, which we will discuss in the coming sections. First, let’s break down the subsidy amount.
Solar Subsidy in India Uttarakhand
Released by the Uttarakhand government in November last year, it is to be launched for financial year 2023 – 2028. As per the policy, the total solar target to be achieved is 2,000 MW. This includes utility scale – 600 MW, distributed scale – 1,400 MW, residential – 250 MW, commercial & industrial – 750 MW, institutional – 350 MW and agriculture – 50 MW. The policy will also introduce a green tariff regulation, in line with other states like Karnataka, Maharashtra, Andhra Pradesh, Gujarat and Uttar Pradesh. The introduction of regulations is associated with virtual net metering and group net metering. It mentions banking (100% of injected energy) throughout the year. There will be grant of intra-state open access within 21 days (captive, group – captive and third party projects). Furthermore, there will be exemption from transmission and wheeling charges—while grid connected solar less than 25 MW shall attract 100 % exemption for a period of 5 years from the COD, transmission & distribution losses shall be applicable. Some of the other attributes are
Exemption from CSS & AS: As per the policy, there will be exemption from CSS & AS, for the solar power plants set up for third-party sale within the state (less than 25 MW) and captive/group captive solar power plants through open access.
For solar projects and new manufacturing facility setup, there will be 100 % exemption of stamp duty on the lease deed of land or purchase of land and 100 % waiver on land use conversion charges/fee. For setting up of solar/energy storage manufacturing facility in Uttarakhand, it has been decided that there will be waiver of electricity duty (for a new manufacturing facility), for a period of 5 years. The net SGST shall be reimbursed to manufacturers and there will be 100 % exemption of custom duty for 5 years.
As far as obligations are concerned, they include the following mandates that have to be followed by consumers All residential consumers with load of more than 5 kW are mandated to install a rooftop solar on their premises to meet a minimum of 30% of their annual electricity consumption. Secondly, all industrial and commercial establishments in urban areas with a connected load of 100 KW or contract demand of 120 kVA and above are mandated to fulfil at least 20%of their annual energy requirements through renewable energy sources, including solar energy. This shall be in line with the Energy Conservation Building Code, 2017(Revision 2021). Thirdly, all existing and upcoming government institutes and buildings are mandated to fulfil at least 20%of annual energy requirements through renewable energy sources, including solar energy. This shall be in line with the Energy Conservation Building Code, 2017 (Revision 2021), applicable for specified building types with a connected load of 100 KW or contract demand of 120 kVA and above.
Why Government gives Solar Subsidy?
India had target to install 40GW solar panels at residential home buildings, but India has achieved only 5GW till 2021. Indian Government sets target 280GW solar panels by 2030 that means, every year should be install 10GW every year. Government has taken new initiative to install solar panels at homes, such as any customers can install solar panels by any solar dealer / distributors / company, installers and after installing they will send solar panel installation photo to the nearest electricity board.
Subsidy Benefits
There are three parties involved in the process: 1. Customers, 2. Channel Partners, and 3. DISCOMS.
1. Customer Benefits
The subsidy is only available on Residential Homes (Individual Homes & Big Apartments), not commercial and industrial sectors. A solar subsidy is only available on Grid Connected Solar System (Without Battery System). As installing a solar system is a huge investment, the financial assistance motivates people to invest and takes some burden off their shoulders.
| System Capacity (kW) | Solar Subsidy (in %) |
| 1kW to 3kW | 40% |
| 4kW to 10kW | 20% |
| More than 10kW | No subsidy |
Homeowners can only install a solar system and claim subsidy through the state DISCOM. They will share customer details and register the nearest channel partner. You can find all states DISCOMS from If you install solar system though subsidy scheme, the solar installation company will provide 5 years of performance warranty, then after you are self responsible for your solar system.
Subsidy Demerits
Let’s see some demerits of subsidy scheme:
1. Customer’s Demerits: I think, there are 2 major demerits, if we install solar system through government subsidy scheme.
Less Warranty: If you install solar system through government solar subsidy scheme, then you will get full system warranty is 5 years. You will be change an inverter after 5 – 7 year
No Option for Top Brands – If you install solar system through this scheme, then you cannot force desired solar panel & inverter brands, such as Loom Solar, Luminous, Microtek, Exide, Enphase, Solar Edge, etc.
2. Channel Partner’s Demerits: As per discussion with industry experts, they face the following problems Big Investment Not assurity of Returning Subsidy Amount from DISCOMs after giving subsidy amount