Cabinet approves Rs 75,021 crore rooftop solar scheme for 10 mn households

The Union Cabinet on Thursday approved a rooftop solar scheme as 'PM Surya Ghar: Muft Bijli Yojana' to install rooftop solar panels across 10 million households with a total outlay of Rs 75,021 crore.

The decision was made at the Cabinet meeting presided over by Prime Minister Narendra Modi.

"Beneficiaries of the government's rooftop solar scheme —Pradhanmantri Surya Ghar: Muft Bijli Yojana — will get free electricity of up to 300 units per month," Union minister Anurag Thakur said.

"The scheme provides a Central Financial Assistance of 60 per cent of system costs for 2 kW systems and 40 per cent of additional system costs for systems between 2 and 3 kW capacity. The CFA will be capped at 3 kW. At current benchmark prices, this will mean a Rs 30,000 subsidy for a 1 kW system, Rs 60,000 for 2 kW systems, and Rs 78,000 for 3 kW systems or higher," the government said in a press release.

The government added that households will apply for subsidies through the National Portal and will be able to select a suitable vendor for installing rooftop solar.

"The National Portal will assist households in their decision-making process by providing relevant information such as appropriate system sizes, benefits calculators, vendor ratings, etc," the government said.

Households will be able to access collateral-free low-interest loan products of around 7 per cent at present for the installation of residential RTS systems up to 3 kW.

Under the scheme, 'A Model Solar Village' will be developed in each district of the country to act as a role model for the adoption of rooftop solar in rural areas, the government said.

Union Finance Minister Nirmala Sitharaman stated during her Interim Budget statement on February 1 that the new scheme could result in yearly savings of Rs 15,000–18,000 for households that install rooftop solar systems.

On February 13, PM Modi renamed the new rooftop solar scheme as 'PM Surya Ghar: Muft Bijli Yojana'. He said the initiative, with an investment of over Rs 75,000 crore, would provide up to 300 units of free electricity every month.

To be sure, a residential rooftop solar scheme was already in place, but it has been updated with new guidelines and incentives.

The Ministry of New and Renewable Energy (MNRE) started the old 'Rooftop Solar Programme Phase-II' on March 8, 2019, with the goal of achieving 4,000 MW of rooftop solar capacity in the residential sector through subsidies or central financial assistance.

As of November 2023, the capacity installed under Phase II of the scheme was 2,651.10 MW.

According to Union Minister for Power and New and Renewable Energy RK Singh, the government will identify households that consume up to 300 units of electricity a month for the new rooftop solar scheme.
More importantly, these households may not be required to pay for solar panels on their rooftops.
Singh stated that people who were allocated low-income houses under the Pradhan Mantri Awas Yojna could be considered.

"We will also go beyond Pradhan Mantri Awas Yojna to identify houses that consume up to 300 units of electricity a month. The scheme is being designed in such a way that such households will not have to pay anything for the rooftop solar installations," the minister said.

The government has appointed eight central public sector undertakings (CPSUs) to carry out the project across ten million households across states and union territories.

Earlier this month, the MNRE stated that residential rooftop solar applications filed before February 13, 2024, will be ineligible for central financial assistance under the new scheme. They will only be eligible for subsidies under the old regime.

The most notable difference between the new scheme and the old scheme is that the minimum subsidy for anyone installing a 1-kW rooftop solar system under the new scheme would be Rs 30,000, up from Rs 18,000 previously.