A sunshine initiative

Centre’s solar initiative should be accommodative to States

  • In her interim Budget Day speech, Finance Minister Nirmala Sitharaman reiterated Prime Minister Narendra Modi’s plan to use rooftop solar panels to power one crore households across the country.
  • According to the Minister, this could save households up to 15,000 annually. So far, it is known that households with a monthly electricity consumption of less than 300 units will be able to install a mid-sized system (1-2 kilowatt), with the government covering the costs.
  • This could require a minimum investment of 1 lakh crore. Rooftop solar systems are currently subsidised up to 40%, with the remaining costs borne by the consumer.
  • The proposed policy would increase the subsidy to 60%, with the remainder financed by a private developer affiliated with a public sector enterprise linked to the Power Ministry.
  • This will ostensibly ensure quality installation and dependable service. There is a ‘net-metering’ mechanism in place, which allows surplus electricity generated by households to be sold back to the grid to repay the loan, though the actual implementation can be quite complex.
  • A monthly consumption of 300 units is insignificant in homes where air conditioners and heaters are standard, but it is a significant metric of consumption according to national standards.The main difference from previous solar promotion policies is that the Centre, not the State power distribution companies (discoms), will be pushing for solarisation.
  • India’s discoms, the majority of which are heavily loss-making, have had little incentive to shift high-consumption customers to decentralised solutions like rooftop solar. Given that such discoms have the most detailed information about power supply at the household level, bypassing them will not be a viable strategy.
  • The Centre’s efforts to raise the profile of a previously underappreciated programme are encouraging. After all, if households are not involved in the transition to decarbonised power, the effort will be ineffective.
  • Only 12 gigawatts (GW) of rooftop solar panels have been installed so far, out of a total of 40 GW planned. Similarly, household rooftops account for only 2.7 GW, with the rest of the electricity coming from commercial or building units.
  • The Centre’s move may thus galvanise a subsidiary domestic solar panel industry — subsidies will not be available for imported panels — and must be modified to be more accommodating to states. Otherwise, there is a real risk that many of the obstacles that have hampered previous initiatives will reappear.

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