Government’s Expenditure on Promoting Solar Rises 63% During Last Four Years

India added 34.8 GW of solar capacity during this period


The government’s expenditure on various programs promoting solar energy was 63% higher at ₹32.4 billion (~$392 million) in the current financial year (FY2022-23) compared with four years ago, Minister for New and Renewable Energy (MNRE) R.K. Singh said in the Rajya Sabha.

The government has steadily raised its expenditure since FY 2019-20, when it stood at ₹19.9 billion (~$240.8 million). However, the Covid-19-induced lockdown in FY 2020-21 saw the expenditure slump to just ₹12 billion (~$144.4 million).

The minister said India added nearly 34.8 GW of solar capacity between April 1, 2019, and January 31, 2023. It includes 25.4 GW of ground-mounted, 6.4 GW of rooftop, and 1.4 GW of distributed capacity.

The government’s expenditure on the promotion of solar includes incentives for phase II of the rooftop solar program. The residential sector can avail of central financial assistance (CFA) of up to 40% for capacity under 3kWp. The CFA for capacity between 3kW to 10kW is at 20%, and for capacity between 10kW to 500kW for residential welfare associations and housing societies.

The rooftop program also incentivizes distribution companies (DISCOMs) with up to 10% of project cost depending upon achievement in capacity addition above the baseline.

Further, the central government provides up to ₹3.3 million (~$39,930)/MW to the DISCOMs under Component A of the PM-KUSUM program, which promotes installing decentralized solar capacity on barren land by farmers and their associations.

Under Component B of the program, a CFA of 30% of the benchmark cost is available for installing solar pumps in off-grid areas. Similarly, Component C meant for the solarization of grid-connected agricultural pumps also receives CFA of 30% of the benchmark cost.

Additionally, the government’s spending towards viability gap funding of up to ₹5.5 million (~$66,550)/MW to Central Public Sector Undertakings and other government organizations selected under the competitive bidding process of CPSU program phase II.

Under the solar park program, the government provides up to ₹2.5 million (~$30,700) per solar park to prepare detailed project reports or about ₹2 million (~$24,200)/MW for infrastructure development in the parks.

Financial assistance in the form of CFA of 40% and 33% of the project cost is also awarded for developing an intra-state transmission system for renewable energy projects under the green energy corridor program for phase I and phase II, respectively.

Finally, the performance-linked incentive program for manufacturing high-efficiency solar PV modules also receives support from the central government.

Budget 2023 proposed capital investments of ₹350 billion (~$4.3) for green energy transition, net-zero objectives, and energy security.

India plans to invest ₹2.8 trillion ($34.2 billion) by 2030 in setting up an inter-state transmission network (ISTS) to evacuate renewable energy.