Centre tweaks Prime Minister’s Rooftop Solar ‘free electricity’ scheme – The Hindu

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The Centre has tweaked the new ₹75,000-crore PM-Surya Ghar Muft Bijli Yojna (Prime Minister’s Rooftop Solar: Free Electricity Scheme). From an initial plan to fully subsidise the installation of 1-3 KW solar systems in one crore households via tie-ups with renewable energy service companies, the scheme will now only contribute up to 60% of the costs, The Hindu has learnt.

Households interested in availing the scheme’s benefits will have to fork out the balance amount and pay a minimum of ₹20,000 depending on the power capacity of the installed system though this could be defrayed by a low-interest, collateral-free loan. Only houses with a suitable roof and an existing connection to the grid will be eligible for the scheme and consumers still have to pay for all the net power supplied and consumed via the grid.

“The free component in this, is in the sense, that it will reduce your electricity bill. You will get a payback and that can range from three to seven years. Whatever capital cost [is invested by consumer] will be recovered in three to five years and after that it could mean even income,” Bhupinder Bhalla, Secretary, Ministry of New and Renewable Energy, the nodal body coordinating the scheme, told The Hindu on Friday. Through a system of net-metering, any solar power produced in a household and unused will flow back into the grid and will be offset in the household’s electricity bill. Depending on consumption patterns, this could even mean consumers earning money, though the general experience, the world over, shows a reduction in bills.

Power Minister R.K. Singh had explained the financing of the scheme differently in an interaction with reporters, as reported by The Hindu on February 3. He had said that public sector units, affiliated to the Power Ministry, would be reaching out to “eligible” households and installing the rooftop solar systems for free. “Sixty per cent of the cost of installation will be subsidised by the Centre. For the rest, [a Central] Public Sector Enterprise will take a loan [from a bank] and will repay from the cost of electricity [used by the household] over and above the 300 units. You as a householder pay nothing,” he had said.

Finance Minister Nirmala Sitharaman in her Budget Speech on February 1 had first mentioned the scheme envisaged to generate up to 300 units of free electricity every month which would translate to benefits of ₹15,000-18,000 annually for households. Prime Minister Narendra Modi had announced the scheme following the consecration ceremony at Ayodhya in January.

Mr. Bhalla clarified that the while there would be an “option” for having service companies provide solar installations, the “focus” of the scheme had shifted towards consumers taking loans and getting installations. “Household-led installations give greater freedom and choice regarding installations. There is greater ownership of the system. For the overall success of the scheme it should be weighed towards individuals,” said Mr Bhalla.

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) and an anticipated improvement in service delivery. “We have learnt from past mistakes. There are 4,300 vendors and a convenient system for a household to apply online and get it installed,” reckoned Mr. Bhalla. “Unlike in the past you don’t have to run around to get an installation.”

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 and wanting to install a rooftop system. A 3 KW-hour system can generate up to 300 units a month, depending on available sunshine and for this a maximum subsidy of up to ₹78,000 will be available.

Currently a rooftop solar system 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. Operation and maintenance costs up to five years will be factored into the cost. “We already have 40 lakh registrations and some installations are already under way in Gujarat. We expect to reach the target of one crore houses in three years,” he added.

India was to have installed 40 GW of rooftop-solar by 2022 but has only managed about 12 GW so far. Only a quarter of these are on houses with the rest in commercial settings. “Were the scheme to rollout as planned and households rise from the current 6.5 lakh to 1 crore, the installed capacity would be 30 GW [billion watt],” according to Mr. Bhalla. “Because only solar panels made by Indian industry would be eligible for the subsidy, this would also lead to a boost in domestic manufacturing capacity.”

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