Recently, the Ministry of New and Renewable Energy has issued draft guidelines for Central Financial Assistance and Payment Security Mechanism for PM Surya Ghar-Muft Bijli Yojana.
The Union Cabinet had approved the Rs 75,000 crore PM Surya Ghar-Muft Bijli Yojana in February 2024 to benefit 1 crore households.
The main facts of the format guidelines:
Models:
The draft guidelines have been issued under the Renewable Energy Service Company (RESCO) model and Rooftop Solar Panel – Utility Led Asset (ULA) model of ‘PM Surya Ghar-Muft Bijli Yojana’.
Renewable Energy Service Company (RESCO) model:
RESCO consumer’s development and ownership of rooftop solar panel maintains validity for at least five years.
RESCO also incurs all operational expenses required for maintenance of the plant as per requirement.
Customers pay RESCO for the power generated and get the benefit of net metering on their electricity bill.
Power Purchase Agreements (PPAs) can be entered into between RESCO and the distribution company (DISCOM) for sale of power generated to the grid.
Utility-based asset (ULA) model:
In this model, the ownership of the rooftop installed solar panel during the project remains with the state distribution company (DISCOM) for a minimum project period of five years, after which the ownership is transferred to the household.
Eligibility for Central Financial Assistance (CFA):
Solar panels installed on rooftops, terraces, balconies and elevated infrastructure / structures of residential buildings which are connected to the grid.
Installation under metering mechanisms such as group net metering and virtual net metering.
Exclusion:
Households that already have rooftop solar panels installed are not eligible for Pradhan Mantri Surya Ghar Yojana under RESCO and ULA models.
The payment security system:
A fund of Rs 100 crore will be set up to ensure payment security, which will be managed by a national programme implementation agency.
Creation of Payment Security Fund ensures financial stability and security for solar projects.
PM Surya Ghar-Muft Bijli Yojana:
It is a central scheme to promote adoption of solar rooftop systems by providing adequate financial subsidy and ensuring convenience in installation.
Objective:
It aims to provide free electrical energy to one crore households in India who want to install rooftop solar panel power units.
Every household will get 300 units of free electricity per month.
The implementing agencies:
The project will be implemented in two phases.
At the National level:
Managed by National Programme Implementation Agency (NPIA).
At the State level:
Managed by State Implementing Agencies (SIA), which are the Distribution Utilities (DISCOMs) or Power / Energy Departments of the respective States or UTs.
Role of DISCOMs:
As SIA, DISCOMs are responsible for facilitating various measures towards promoting rooftop solar energy transition, including ensuring availability of net meters, timely inspections and commissioning of installations.
Subsidy structure:
The scheme provides subsidy to reduce the cost of solar rooftop system installation. The subsidy is limited to a maximum of 3 KW capacity.
60% subsidy for solar systems up to 2 KW capacity.
40% subsidy for solar systems between 2kW to 3kW capacity.
Additional features of the program:
Model Solar Villages:
A ‘Model Solar Village “will be developed in each district, which will act as a demonstration project and promote adoption of rooftop solar systems in rural areas.
Incentives for Local Bodies:
Urban Local Bodies and Panchayati Raj Institutions will be encouraged to set up rooftop solar power plants in their respective areas.
Expected Benefits of Pradhan Mantri Surya Ghar-Muft Bijli Yojana:
Economic benefits:
Households will get the benefit of reduction in electricity bills and they will be able to earn additional income by selling surplus power to distribution companies (discoms).
The 3 KW rooftop solar system can generate more than 300 units of electricity per month, providing free electricity as per the objectives of the scheme.
The solar energy production:
The scheme is expected to leverage 30 GW solar capacity through solar system installation on the rooftops of the building, generating 1000 billion Units (BU) of electricity over the 25-year lifetime of the solar system.
Reduced Carbon Emissions:
This will reduce CO2 equivalent emissions by 720 million tonnes, contributing significantly to environmental sustainability.
The creation of jobs:
The scheme is expected to generate about 17 lakh direct employment in various sectors such as manufacturing, logistics, supply chain management, sales, installation, operation and maintenance (O & M).
Challenges in the implementation of the plan:
Domestic reluctance:
An important challenge is that domestic households are not showing interest in installing rooftop solar systems due to free power being provided by many States and UTs.
The use of limited space:
Facilitating the 1-2 kW segment is complex due to limited rooftop space, uneven terrain, shadows, low property ownership and risks such as theft or vandalism of solar panels.
Operational pressures on DISCOMs:
The current net metering system is financially burdensome for DISCOMs, which are already incurring huge losses.
Discoms become unpaid storage facilities for homeowners who generate solar-based power during the day but consume energy from the grid at other times, especially during the night.
Storage Integration:
Lack of mandate for storage systems installing rooftop solar systems can lead to grid management problems like ‘duck curve’.
The Duck Curve is a graphical representation of the demand for electricity from the grid on days when solar power generation is high and the demand in the grid is low.
Challenges to quality assurance:
Customers often have difficulty assessing the quality of installed systems, leaving them vulnerable to low levels of service and performance.
Solution:
Ensuring access to the target beneficiaries:
There is a need to develop strategies in partnership with local bodies to reach out to economically disadvantaged households that consume less than 200-300 units of electricity per month.
The Community Solar Projects:
The development of community solar projects that allow shared solar generation from a central plant, benefiting low-income and rural households that cannot afford to install rooftop solar systems, should be encouraged.
Amendments in Net Metering:
Options such as time-of-use (TOU) pricing, where consumers are charged based on the time of energy consumption, should be considered to reduce the pressure on the grid from excess solar power generation during the day.
The need for storage integration:
Storage integration needs to be mandated for all rooftop solar systems to enhance grid stability and optimize the use of surplus solar energy.
