Cabinet nod to ₹75,021 cr rooftop solar scheme for 1 cr households

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved PM-Surya Ghar: Muft Bijli Yojana or Solar Rooftop Scheme, with a total outlay of ₹75,021 crore for installing rooftop solar and providing free electricity up to 300 units every month for 1 crore households. The Prime Minister had launched the scheme on 13th February 2024.

Finance Minister Nirmala Sitharaman, in her Budget 2024-25 speech, had said the solar rooftop scheme will lead to savings of up to ₹15-18,000 annually for households from free solar electricity and selling the surplus to the distribution companies.

Other changes expected through the scheme include a boost for the charging of electric vehicles; entrepreneurship opportunities for a large number of vendors for supply and installation; and employment opportunities for the youth with technical skills in manufacturing, installation and maintenance.

The Solar Rooftop Scheme provides a central financial assistance (CFA) of 60% of system cost for 2 kW systems and 40% of additional system cost for systems between 2 to 3 kW capacity. The CFA will be capped at 3 kW. At current benchmark prices, this will mean ₹30,000 subsidy for 1 kW system, ₹60,000 for 2 kW systems and ₹78,000 for 3 kW systems or higher.

The households will apply for subsidy through the national portal and will be able to select a suitable vendor for installing rooftop solar. It will assist the households in their decision-making process by providing relevant information such as appropriate system sizes, benefits calculators, vendor ratings, etc.

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

Other features of the scheme include a model solar village, which will be developed in each district of the country to act as a role model for the adoption of rooftop solar in rural areas. “Urban local bodies and panchayati raj institutions shall also benefit from incentives for promoting RTS installations in their areas. The scheme provides a component for payment security for renewable energy service company (RESCO) based models as well as a fund for innovative projects in RTS.”

On the outcome and impact, the Cabinet says through this scheme, the households will be able to save electricity bills as well as earn additional income through the sale of surplus power to DISCOMs. A 3 kW system will be able to generate more than 300 units a month on average for a household.

The proposed scheme will result in the addition of 30 GW of solar capacity through rooftop solar in the residential sector, generating 1000 BUs of electricity and resulting in a reduction of 720 million tonnes of CO2 equivalent emissions over the 25-year lifetime of rooftop systems.

It is estimated that the scheme will create around 17 lakh direct jobs in manufacturing, logistics, supply chain, sales, installation, O&M and other services.