Govt. Subsidy

Subsidy on Solar Panel

Solar energy is the energy obtained from the sun which is renewable and can be used for multiple purposes. India’s geographical location is such that it receives tropical sunlight from anywhere in a large quantity throughout the year. Both the Central Government and State Nodal Agencies (SNA’s) offer subsidy schemes and encourage people to cut down their electricity bills. Deep diving into the concept of Government subsidy for solar system installation in India. India has earned the title of the fastest developing solar power industry on a global scale and also for producing lower-cost solar power in the world. Various schemes have been launched to encourage the domestic use of solar power.

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For solar panel schemes in India, if you are planning to install rooftop PV systems you can avail of loans up to Rs 10 lakhs from nationalized banks under the category of home loans or home improvement loans.

This subsidy on solar panels is for institutional, residential, and social sectors and not for commercial, industrial, and public sector undertakings.

The Indian Ministry of New and Renewable Energy (MNRE) has introduced various Central Financial Assistance (CFA) schemes to favor the use of solar energy in India and achieve the target of 100 GW electricity usage. Through this government will provide subsidies on solar panels to enterprises that are contributing to the growth.

Government Subsidies on Solar Installation

The Indian Ministry of New and Renewable Energy (MNRE) has introduced various Central Financial Assistance (CFA) schemes to favor the use of solar energy in India and achieve the target of 100 GW electricity usage. Through this government will provide subsidies on solar panels to enterprises that are contributing to the growth.


This subsidy on solar panels is for institutional, residential and social sectors and not for commercial, industrial, and public sector undertakings.


The Ministry of New and Renewable Energy (MNRE) says that the Central Government pays 30% of the benchmarked installation cost for roof PV systems which is limited to some states, whereas a subsidy of 70% benchmark installation costs is offered to special category states of North which are Uttarakhand, Himachal Pradesh, Jammu & Kashmir, and Uttar Pradesh. The target solar rooftop installations should be cumulatively 8 lac consumers by the end of the financial year 2021-22 and the solar rooftop subsidy will be provided accordingly.


State subsidy of 40% should be available for solar rooftop systems up to 3kW and 20% for solar rooftop systems between 3 kW to 10 kW, which will be installed and commissioned by private residential consumers. If the capacity of the solar rooftop system is beyond 1 kilowatt DC, it can be installed irrespective of a sanctioned load of consumers. There is a possibility that a subsidy on a solar panel can be limited to the maximum capacity of 10 kW.


Various schemes introduced by the government

The Indian government has come up with various solar panel schemes to provide to the enterprises that are promoting growth.


For Solar parks and Ultra-mega solar power projects

CFA totaling INR 2 M/MW or 30% of the project’s cost. This also includes grid-connectivity costs. Additionally, INR 2.5 M per plant is also availed for conducting surveys and preparing Detailed Project Reports(DRPs)


For grid-connected rooftop

CFA will provide 30% benchmark cost for general and 70% CFA costs for residential, social, and institutional sectors.


For the development of grid-connected PV plants on canal banks and tops

This is an industrial subsidy on the solar panel. The financial support offered is 30 % of the project cost for canal top projects and 15% of the project cost on canal bank projects. The total amount CFA will distribute is INR 2.25 Billion for 100 MW for a maximum of two years. It will have to pay a 1% service charge to Solar Energy Corporation of India (SECI)


PV Lighting systems

For lights, lanterns streetlights, and lead-acid batteries the benchmark cost will be INR 340/W and CFA- INR 102/W For street lights with lithium Ferro phosphate batteries. Benchmark cost- INR 475/W and CFA- INR 142.5/W


Solar power plants with battery banks

2 VAh/W with a capacity of up to 10 kW. Benchmark cost- INR 135/ W and CFA- INR 40.5/W


Solar pumps from 3 HP to 5 HP

  • Up to 3 HP (DC): CFA= INR 30,000/HP & Benchmark cost= 120,000/ HP
  • Up to 3 HP (AC): CFA= INR 25,000/HP & Benchmark cost: 100,000/HP
  • 3 HP to 5 HP (DC): CFA= 19,000/ HP & Benchmark cost= 95,000/HP
  • 3 HP to 5 HP (AC): CFA= 17,000/ HP & Benchmark cost= 85,000/HP


Benefits of Subsidy on solar panels

For solar panel schemes in India, if you are planning to install rooftop PV systems you can avail of loans up to Rs 10 lakhs from nationalized banks under the category of home loans or home improvement loans.


Consumers will also be eligible for generation-based incentives and receive Rs 2 per electricity generated.


The average cost of solar rooftop PV installation will be around 60,000-70,000 which after leveraging solar rooftop subsidy will sum up between 42,000-49,000.


Under the Indian government solar panel scheme, a customer can also earn up to Rs 2000 to 3000 per annum as a generation-based incentive. To obtain a generation-based incentive, the electricity generation by each customer should be around 1100 kWh to 1500 kWh.


Furthermore, people can also sell excess electricity and would receive a regulated cost per unit as per tariffs set by the government


MNRE Solar Benchmark Cost 2021-22: Grid Connected Rooftop Solar Power Plant

Capacity States other than Special Category(Rs/KWp) Special Category States (Rs/KWp)
1 KWp 51,100 56,210
Above 1 KWp – 2 KWp 46,980 51,670
Above 2 KWp – 3 KWp 45,760 50,330
Above 3 KWp – 10 KWp 44,640 49,100
Above 10 KWp – 100 KWp 41,640 45,800
Above 100 KWp – 500 KWp 39,080 42,980

Energize the future with solar power

In order to achieve the above target, Government of India have launched various schemes to encourage generation of solar power in the country like Solar Park Scheme, VGF Schemes, CPSU Scheme, Defence Scheme, Canal bank & Canal top Scheme, Bundling Scheme, Grid Connected Solar Rooftop Scheme etc.

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