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Solar Power Subsidies available in India

July 06, 2020

Solar energy is very easily obtained in India due to its geographical location which provides ample amount of tropical sunlight.

Solar energy is very easily obtained in India due to its geographical location which provides ample amount of tropical sunlight. Moreover, according to authorities the country receives more than 300 days of clear skies & around 5,000 trillion kWh per year energy is experienced all across India’s land area with most parts receiving 4-7 kWh per sq. m every day.

The government is looking to make solar power the primary source of energy in the country and thus has come up with a number of schemes which have been launched in order to encourage more domestic usage of solar energy.

There are several reasons that accentuate the benefits of installing solar rooftop panels along with the availability of subsidies for the same. The solar subsidies thereby end up benefitting investors and developers in the following manner:

  • A secure investment
  • It increases access to energy
  • Cost Savings
  • Support from the government
  • Reduces carbon footprints
  • Green source of energy
  • Low maintenance cost
  • Suitable for Indian climate
  • Multiple applications of solar power
  • It doesn’t require additional space for installation

The schemes and their details have been enumerated below:-

The Rooftop Scheme:

The installation of solar rooftop systems can be very helpful in generating sustainable electricity in houses and use it for several different purposes like residential, commercial and even industrial. While this is a great option, there are not a lot of people willing to install rooftop solar panels and this is mainly because of the high installation costs. In order to implement this scheme and make solar power more accessible to the general public, the government has launched several schemes and subsidies to urge people to install solar panel rooftops in their households.

Subsidies given for installation of solar power panels:

The government has made provisions for those who plan to install rooftop panels by making available priority sector loans of up to 10 lakhs (US$ 1 million) from nationalised banks. According to the Ministry of New and Renewable Energy, the central government is liable to pay 30 per cent of the benchmarked installation cost for the rooftop Photovoltaic system, for this purpose.

This scheme is available for the states in the general category, whereas the states and the union territories comprised within the special category i.e  Uttarakhand, Sikkim, Himachal Pradesh, Jammu & Kashmir, and Lakshadweep, can avail up to 70 per cent of the predetermined installation cost from the government.

Apart from this, individuals can also sell the surplus solar power generated within their household’s solar unit to the grid at the rate of Rs. 2 per unit ($0.027 per unit). This process is done through the concept of net metering. The details pertaining to net metering have been explained below:-

Net Metering

Net metering refers to a process wherein the electricity board keeps track of the energy consumed as well as generated by a solar-powered household. Through this monitored system, it allows consumers to feed surplus solar power into the state’s power grid whenever they feel that they have a surplus and don’t have a need for it and they thus receive a credit for the same in their electricity bill via the state’s electricity board. For instance, if an individual lives in a state which has implemented the system of net metering, then that individual shall get credited for the electricity which he/she provides to the grid at the same retail price that they may pay for the electricity which they acquire from the grid.

For example, retired IAF officers residing in Trishul Cooperative Housing Society in Mumbai spent Rs. 8.38 lakh ($11,221.29) to install 40 solar panels over their 14 storey high building in November 2016. The electricity generated from these panels is powering the common areas of the housing society including the lights, fans, elevators and motors and it has helped reduce the monthly electricity bill from Rs 20,000 ($267.81) to Rs 350 ($4.69) which amounts to a drop by almost ninety eight percent which is incredible.

State implemented subsidies for solar power generation

  • Tamil Nadu
As of January 2017, the state of Tamil Nadu has the largest amount of solar power commissioned to it at a staggering 1590.97 MW. The Tamil Nadu state government has therefore undertaken various steps to promote renewable energy and its adoption. In 2013, the government issued an order offering a capital subsidy of Rs 20,000 ($267.81) for each 1 kW solar rooftop system installed.

Furthermore, Tamil Nadu’s draft policy on solar power mandates that 30 per cent of the energy requirements for street lights, water supply and even public buildings is to be met from solar energy by the year of 2022.

  • I-SMART – Gujarat
This programme had been launched by the state government for the purpose of directly benefitting more than 2 lakh ($2,678.11) families which implement and adopt solar power by the financial year of 2020. Under the said scheme, a subsidy of 40 per cent shall be applicable on those households which install systems up to 3 kilowatts (kW) of solar energy and further, a subsidy of 20 per cent for a system of 3 kW to 10kW of solar energy. In order to implement this rooftop solar policy, the state government has made a provision of Rs. 1,000 crores ($134 Mn) to encourage the adoption of solar power within households. It is important to note that this scheme is only available for residential customers.

Salient features about the rooftop PV systems under the subsidy schemes

The important aspects of this scheme and the subsidy offered are given below:

  • Approximately 100 square feet of space is required for the installation of the rooftop PV system.
  • The average cost of installation of the rooftop PV system without a subsidy is around Rs 60,000 – 70,000 ($803.43- $937.34)
  • After availing off the 30 per cent subsidy, peopleare only required to pay Rs 42,000 – 49,000 ($$562.40- $656.14) for the installation of the rooftop PV system.
  • In order to avail this generation-based incentive, the customer is required to generate a minimum of 1100 kWh – 1500 kWh every year.
  • Under this scheme, a customer can earn up to Rs 2000 to 3000 ($26.78- $40.17)  per annum as a generation-based incentive.

Application process for the subsidy

  • The interested parties are required to contact their electricity provider for expressing their interest in applying for this scheme. After this, the concerned officials shall visit the installation site in order to assess it and give the requisite approval.
  • These officials are also required to explain in detail the necessary aspects for the installation of the system along with the fees to be paid for it.
  • The users can also seek the approval for the installation of these monitoring systems from the inspection officers during their visit itself.
  • The customer is required to call the electricity provider for inspection after the completion of the installation process as well.
  • After this, the officer is required to inspect the installation and give his or her approval for availing of the subsidy by the customer.
  • Lastly, post these steps the customers can avail the subsidy amount. They can also get tariff details of the excessive units which will be sold to the government thereafter.


India should look forward to lead the way in moving from fossil fuel based energy to solar energy. It is highly beneficial from other perspectives as well, such as, the economy since it creates local jobs in installation, maintenance and also helps reduce India’s foreign currency burden by reducing the imports.

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