Solar Panel Subsidy in India 2023

When we talk about solar energy, we first consider solar system pricing, followed by solar panel subsidy schemes. Today, we will learn about the government’s solar subsidy scheme and the procedures in each state of India.

We spoke with a number of solar industry specialists while writing this article.

What Does Solar Subsidy Mean?

We all know that solar energy is a free and clean form of energy that minimizes our reliance on natural resources like water and coal. The government intends to install solar panels on every home’s roof so that it can generate its own energy. The government provides financial assistance to people who want to put solar panels in their homes.

Solar Panel Subsidy Scheme in Different States of India 2022

1. Solar Panel Subsidy in Maharashtra

MEDA is in charge of Maharashtra’s solar project subsidy. Maharashtra currently has more than 1800 MW of installed solar energy capacity, with rooftop solar nearing 230 MW. It boasts the country’s fourth-largest installed rooftop solar power-producing capacity. The state’s strategy of giving financial aid for the use of solar energy in cottages and micro businesses is being strengthened.

2. Solar Panel Subsidy in Rajasthan

The government announced a 40% subsidy for systems up to 3 kW, but because of the pandemic, getting funding was problematic. Residential homeowners that install on-grid solar systems are eligible for the incentive. After submitting the entire installation documentation on their portal, the state DISCOM business will offer it.

3. Solar Panel Subsidy in Kerala

The centre would give a 20 percent subsidy for group housing society projects and residential welfare organizations with a capacity of up to 500 kW. If a customer desires to build the plant in its entirety, they can receive a subsidy of up to 40% of the plant’s cost.

4. Solar Panel Subsidy in Haryana

Haryana (Department of Renewal Energy) has initiated an electricity-saving initiative named Solar Rooftop Power Plant to preserve the resources for future generations. Solar System Plants are provided to every residential, institutional, social sector, private, commercial, and industrial sector in the state under this scheme.

5. Solar Panel Subsidy in Uttar Pradesh

In Uttar Pradesh, there is a subsidy for solar panels. Uttar Pradesh is one of India’s largest and poorest states, although it receives a lot of sunlight. The state plans to build solar parks on public land in various sections of the state. In India, Uttar Pradesh has the seventh-largest installed rooftop solar power-producing capacity.

6. Solar Panel Subsidy in West Bengal

In India, West Bengal is a pioneer in solar technology. WEBEL, a government-owned company, was one of the country’s first solar energy panel manufacturers. Solar rooftop systems must be installed by all big housing societies in West Bengal (with a total contract demand of more than 500 kW) to meet a minimum of 1.5 percent of their total electrical load. The subsidies are available in accordance with SECI criteria.

7. Solar Panel Subsidy in Madhya Pradesh

The government announced a 40% subsidy for up to 3 kW systems, but due to the lack of funding during the pandemic, it was difficult to get. It is provided to homeowners who install on-grid solar systems in their homes. After submitting the entire installation documentation on their portal, the state DISCOM company will deliver it.

8. Solar Panel Subsidy in Andhra Pradesh

9. Solar Panel Subsidy in Jharkhand

10. Solar Panel Subsidy in Bihar

Why Does The Government Provide Solar Subsidy?

Earlier, India set a goal of installing 40 gigawatts of solar panels on residential structures by 2021, but just 5 gigawatts have been installed so far. Now, The Indian government has set a goal of installing 280GW of solar panels by 2030, which means that 10GW should be installed per year.

The government has launched new initiatives to encourage the installation of solar panels at residences, such as allowing any client to have solar panels installed by any solar dealer, distributor, or company, and then sending a photo of the installation to the local electricity board.

Advantages of Solar Subsidy

In this process, three parties are involved: DISCOMS, Channel Partners & Customers.

Customers are pleased because they receive financial assistance, the channel partner is pleased because they gain new customers, and the government is pleased because it is one step closer to achieving its solar target.

How DISCOMS benefit from solar subsidy?

Residential power usage decreases, allowing them to provide more in the commercial sector. Commercial locations, we know, use more electricity than residential areas.

How Channel partners benefit from solar subsidy?

A broader consumer base and more business benefit channel partners. Even though he desperately wants the subsidy, it is difficult for the average person to figure out how to receive it. The channel partner enters the picture at this point. He makes every effort to collaborate with the customer and government departments in order to speed up the process of obtaining a subsidy for the consumer.

How Customers benefit from solar subsidy?

Residential homes (individual homes and large apartments) are eligible for the subsidy, but not commercial or industrial properties. Only Grid Connected Solar Systems are eligible for a solar subsidy (Without Battery System). Because installing a solar system is such a large expenditure, financial aid encourages people to do so and relieves part of the financial load.

The capacity of the system (kW)	Subsidy Percentage
From 1kW to 3kW	40% of the total
From 4kW to 10kW	20% of the total
10kW or more	There will be no subsidy

Installing a solar system and claiming a subsidy through the state DISCOM is the only option for homeowners. Customers’ information will be shared, and the nearest channel partner will be registered. All states’ DISCOMS can be found here.

If you install a solar system under a subsidy programme, the solar installation business will issue a 5-year performance warranty, after which you will be liable for the solar system on your own.

Commercial and industrial customers are not eligible for this subsidy since they are eligible for additional benefits such as accelerated depreciation, tax holidays, and excise duty exemptions.

Disadvantages of Solar Subsidy

Let’s look at some of the disadvantages of the solar subsidy scheme:

Disadvantages to Customer

There are two big disadvantages to installing a solar system under a government subsidy programme.

Less Warranty: If you install a solar system under the government’s solar subsidy programme, you’ll get a 5-year warranty on the entire system. After 5-7 years, you will need to replace the inverter.
No Top Brands: If you install a solar system using this method, you won’t be able to specify the solar panel and inverter brands you want, such as Luminous, Microtek, Exide, Enphase, Solar Edge, and so on.

Disadvantages to Channel Partners

According to industry analysts, they are confronted with the following issues:

a significant investment.
There is no guarantee that DISCOMs will provide subsidy funds system installation.
Service and warranty for the next five years.

Estimated Cost of Solar Panel Subsidy

MNRE’s benchmark cost of a grid-connected solar system in 2022:

Solar Panel System	Benchmark Cost (₹/W)
1kW	₹51.10
Above 1kW to 2kW	₹46.98
Above 2kW to 3kW	₹45.76
Above 3kW to Upto 10kW	₹44.64
Above 10kW and Upto 100kW	₹41.64
Above 100kW and Upto 500kW	₹39.08

If you want to install a solar panel system with the latest technology, the average cost per kW in India is Rs. 60,000, however, prices vary slightly from state to state. This is the average price without subsidy, which includes the cost of the product, installation, and service for five years with net metering.

Solar Panel System	Subsidy From the Government	Cost To Customer
Up to 3kW	40%
Above 3kW to Upto 10kW	20%
Above 10kW	0%
Cost of 3kW Solar System	Without Subsidy	1,80,000
Customer Payable Amount	With Subsidy (- Rs. 72,000)	1,08,000
Cost of 5kW Solar System	Without Subsidy	3,00,000
3kW	40% Subsidy (3*24,000)	-72,000
2kW	20% Subsidy (2*12,000)	-24,000
Customer Payable Amount	With Subsidy (-96,000)	2,04,000
5kW – Generation	Benefits	Units – Rs. 7.5/U
Daily Generation	25 Units	187
Monthly Generation	625 Units	4687
Yearly Generation	7,500 Units	56, 250
Lifetime Generation	1,87,500 Units	14,06,250
Return on Investment		3.6 years
Income		6.89X

People who install solar rooftop systems can receive subsidies from both the centre and state governments. The centre government provides a 30% subsidy to states in general categories for these systems. The centre government provides subsidies of up to 70% to special states such as Uttarakhand, Sikkim, Himachal Pradesh, Jammu & Kashmir, and Lakshadweep.

Without a subsidy, the typical cost of installing a rooftop PV system should be between Rs 60,000 and Rs 70,000. To qualify for the generation-based incentive, the consumer must generate between 1100 and 1500 kWh per year.

An individual who is interested in receiving a subsidy must adhere to certain guidelines. He’ll need to call their power provider (or apply online with the relevant papers), who will inspect and approve the installation site. The electricity provider then pays a visit for an inspection. Customers can then take advantage of the subsidy.