Cabinet Approves New Rooftop Solar Subsidy Program with Outlay of ₹750.21 Billion

The program is expected to add up to 30 GW of residential rooftop solar capacity


The Union Cabinet has approved the Pradhan Mantri-Surya Ghar: Muft Bijli Yojana, aimed at installing rooftop solar systems on 10 million households, with a total outlay of ₹750.21 billion (~$9.05 billion) until the financial year (FY) 2025-26.

Prime Minister Narendra Modi had announced the new subsidy program for residential consumers on February 13, 2024.

Under the new program, a subsidy of ₹30,000 (~$361)/kW will be provided for residential rooftop solar systems up to 2 kW for applications submitted after February 13, 2024. An additional ₹18,000 (~$217)/kW will be available for systems of over 2 kW and up to 3 kW capacity, while for projects exceeding 3 kW, depending on the average monthly power consumption of the household, the total subsidy will be capped at ₹78,000 (~$939).

Consumers must apply for subsidy through the National Portal and select a vendor to install the rooftop solar system. The portal will provide consumers with information on system sizes, benefits calculators, vendor ratings, etc., to help with the decision-making process.

Under the program, valid for two years – FY 2023-24 and FY 2024-25 — consumers will get access to collateral-free, low-interest loan options at as low as 7% to install rooftop solar systems of up to 3 kW capacity.

Households are expected to save on electricity costs as well as earn additional income through the sale of surplus power from the rooftop solar systems to the state DISCOMs.

The government will develop a model solar village in every district of the country to promote rooftop solar adoption in rural areas. It will also incentivize urban local bodies and Panchayati Raj institutions to promote rooftop solar in their respective areas.

According to Anurag Thakur, Minister of Information and Broadcasting, only domestically manufactured solar cells and modules will have to be used in these projects.

The program budget will allow for payment security for renewable energy service company-based installations and also fund innovative projects in the rooftop solar segment.

The PM-Surya Ghar program is expected to add up to 30 GW of residential rooftop solar capacity, generate 1,000 BUs of electricity, and reduce 720 million tons of CO2e emissions over a 25-year project lifetime.

The program is expected to create ~1.7 million direct jobs in manufacturing, logistics, supply chain, sales, installation, operation and maintenance, and other services.

The government, however, has yet to clarify the subsidy structure for residential welfare associations and group housing societies adopting rooftop solar.

Recently, the Maharashtra State Electricity Distribution Company announced plans to install 3 million rooftop solar systems on houses in the state under the new program. The state has set a district/region-wise target and directed all field offices to focus on technical feasibility approvals and meter testing.