On-Grid and Off-Grid Subsidy Schemes in India

On-Grid Solar Subsidy

This article features the subsidy scheme for both on-grid and off-grid solar systems in India. For achieving a cumulative capacity of 40,000 MW from rooftop solar projects by 2022, MNRE has announced subsidies till December 31st, 2022.

The Central Financial Assistance (CFA) to the residential sector is as follows:

• CFA @ 40% for capacity up to 3 kW
• CFA @ 20% for capacity beyond 3 kW and up to 10 kW
• CFA @ 20% for GHS/RWA capacity up to 500 kW (limited to 10 kW per house and total up to 500 kW)

One of the prerequisites for claiming the subsidy is that only domestic manufactured solar modules and solar cells are to be used. CFA shall be on % of the benchmark cost of MNRE for the state/ UT or lowest of the costs discovered in the tenders for that state/ UT in that year, whichever is lower. The implementing agency will be the DISCOMs.  The residential consumer who wishes to seek CFA has to approach the DISCOMs operating in his area for installation of rooftop solar plant and get the CFA.

MNRE has also allowed subsidies for DISCOMs up to an initial capacity of 18 GW.

• No incentives for capacity addition of up to 10%
• 5% incentives for addition of 10% – 15%
• 10% incentives for addition beyond 15%.

Benchmark costs for grid-connected rooftop solar PV systems for FY 2020-21. The benchmark costs are inclusive of total system cost including Photo-Voltaic solar modules, inverters, the balance of systems including cables, Switches/Circuit Breakers, etc. but do not include net metering cost and battery backup costs.

Also, read All you wanted to know about Solar Subsidies in India.

Off-Grid Solar Subsidy

For the off-grid solar system, capacity installation of 118 MW by 2020:

• CFA of 30% of the benchmark cost of the system or the tender cost, whichever is lower for solar street lights and solar power plants in the General Category States and CFA of 90% of the benchmark cost or tender cost whichever is lower, in the North Eastern States including Sikkim, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Lakshadweep, and A&N Islands.
• For Solar Study Lamps CFA of 85% of the lamp cost will be provided and the balance 15% of the lamp cost will be borne by the beneficiary student.

For strengthening rural livelihoods, improving income generation, and reducing the usage of fossil fuels in the states of Assam, Madhya Pradesh and Odisha, a subsidy of 30% of the benchmark cost or tender cost, whichever is lower will be given to eligible beneficiaries for the RE technology system. SNAs identify the renewable energy-based livelihood applications and submit proposals for the approval of CFA.

For more details, please refer to MNRE Solar Schemes.