Cabinet approves Rs5,000-cr subsidy for solar rooftops

The union cabinet on Wednesday approved a Rs5,000-crore subsidy for rooftop solar power generation, giving a big boost to the government's clean energy initiative.

The cabinet decision will help provide subsidies for residential and institutional solar rooftop power generation and ensure speedy payment by power distribution companies to roof-top power suppliers.

The cabinet committee on economic affairs, chaired by the Prime Minister Narendra Modi approved the scaling up of budget from Rs600 crore to Rs5,000 crore for implementation of  'grid connected rooftop systems over a period of five years up to 2019-20 under the National Solar Mission (NSM).

This is expected to support Installation of 4,200 MW solar rooftop systems in the country in the next five years.

Of the Rs5,000-cr capital subsidy, 30 per cent will be provided to general category states and union territories and 70 per cent to special category states, ie, north-eastern states, including Sikkim, Uttarakhand, Himachal Pradesh, Jammu and Kashmir and Lakshadweep, Andaman and Nicobar Islands.

There will be no subsidy for commercial and industrial establishments in the private sector since they are eligible for other benefits such as accelerated depreciation, custom duty concessions, excise duty exemptions and tax holiday etc.

The additional capacity of 4,200 MWp is expected to come up through residential, government, social and institutional sectors (hospitals, educational institutions etc). Industrial and commercial sector will be offered incentives other than subsidy for installations of solar roof top power plants.

The government expects these to create the market, build confidence of consumers and enable the balance capacity through market mode to achieve the target of 40,000 MWp by 2022.

The government has revised the target of National Solar Mission (NSM) from 20,000 MWp to 1,00,000 MWp by 2022. Out of the 40,000 MWp is to come through grid connected solar rooftop systems. This approval will boost the installations in a big way and will act as a catalyst to achieve the goal of 40,000 MWp.

A large potential is available for generating solar power using unutilised space on rooftops in buildings.

Solar power generated by each individual household, industrial, Institutional, commercial or any other type of buildings can be used to partly fulfill the requirement of the building occupants and any surplus can be fed into the grid. So far, 26 states have notified their regulations to provide net metering/gross metering facilities to support solar rooftops installations.

Solar power from solar rooftop systems is estimated to cost about Rs6.50/kWh, which is cheaper than diesel gen-sets based electricity generation. It is also cheaper than the cost at which most DISCOMs would make power available to the industrial, commercial and high-end domestic consumers.

The 40 GW solar power generation will result in abatement of about 60 million tonnes of CO2 per year and will help to fulfil the commitment of India towards its contribution in mitigating the effect of Climate Change.