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Solar power is the future – we keep hearing this over and over again! But have there been efforts made at the government level to popularize mass adoption of solar yet? Well, as a matter of fact, yes.
The government of India has been running a solar subsidy program for many years now. The primary purpose of offering a solar panel subsidy is to encourage homeowners to adopt solar.
Towards the beginning, the state-wise solar subsidy program was devised to meet the target of installing 4 GW worth of solar systems at homes across the entire country by December 2022.
Due to the onset of the COVID-19 pandemic, things got delayed. Now, the residential installation target has been extended up to December 2024.
Very recently, Prime Minister Narendra Modi also announced a National Subsidy Scheme. A National Portal for Rooftop Solar was launched on the 30th of July, 2022.
The state-wise solar panel subsidy program and the National Subsidy Scheme will run parallelly. The purpose is still the same – meeting the 4 GW residential solar target by 2024.
Interestingly, once the 4 GW residential solar target is met, the solar panel government subsidy initiative will also come to an end.
If you’ve been meaning to install a solar system at home, this would be the best time to do so – why not apply for the subsidy as long as the government solar panel scheme is still available?
Besides, did you know that a subsidy is offered for an entire solar system, and solar panels are just one component of a solar system? Care to find out more such facts about the state-run solar panel subsidy program and the National subsidy scheme?
Want to find out the benefits of availing a solar panel subsidy in India? Want to understand the cost of a solar system for home in India government subsidy programs? We have all the answers and we have discussed them in this guide. Dive in for all details!
State-wise subsidy program and the National Subsidy Programme at a glance
We will walk you through the benefits of installing solar panels with a subsidy in India.
But, first things first – what’s unique about the state subsidy program and the National subsidy scheme?
The state-wise government solar panel scheme for homes and housing societies
It started as a state-run program. Each state was allocated a quota of subsidies. The state DISCOMs run the solar rooftop subsidy scheme to encourage solar installation within the state.
Each state that has an active subsidy program runs the government solar panel scheme in association with the MNRE (Ministry of New and Renewable Energy). However, some states have never run any solar panel subsidy program under this scheme.
Out of all the states that offer a govt subsidy on solar panels, only Gujarat has been able to overcome the hurdles and popularize the adoption of solar among homeowners. Over 3 Lakh homes have already purchased solar and taken the benefit of the subsidy.
If you want to know whether or not your state offers a subsidy on solar systems and what’s its allocated quota, you can check out this link: https://solarrooftop.gov.in/grid_others/phase2SanctionList.
The National Solar Subsidy Scheme
This scheme is also known as the DBT scheme – Direct Bank Transfer. Consumers can apply for a subsidy through the National Portal for Solar Portal.
The subsidy will be credited directly into the bank accounts of the customers within 30 days of the commissioning of the solar system.
Here’s how it’s different – even if your state does not offer a solar panel subsidy yet, you can still avail of the subsidy by applying for the same via the National Portal for Rooftop Solar.
More details will be coming up a little later!
Let’s now help you demystify the solar panel subsidy like never before.
Top 5 pointers about Solar Panel Subsidy in India (2022)
There are two kinds of solar panels that homeowners prefer: polycrystalline and monocrystalline. If you want to claim a govt subsidy on solar panel systems, you must install solar panels that are made in India.
Made-in-India solar panels are also called DCR solar panels. Out of the two types, as of now, only polycrystalline panels are manufactured in the country.
All in all, you get a solar panel subsidy on the installation of an on-grid solar system that has ALMM-approved DCR solar panels.
That being said, let’s now serve you the facts and also debunk some solar subsidy myths in the upcoming sections.
#1. Solar panel cost in India before subsidy
Here’s the one question that confuses people – what is the cost of a solar system in India?
In fact, the amount of solar panel subsidy can only be understood when you first understand what influences the cost of a solar system.
Instead of walking you through half the information, we’ll spill out all the beans.
It’s not necessary that two solar modules (panels) of the same size but different brands will have the same price. Similarly, it’s not necessary that two installation companies that are offering the installation of a solar system of the same capacity will do it at the same prices.
Why so much variation in the cost – you ask us? That’s because the price of a solar system depends on not one but many factors, such as:
- Brand & Technology of the components used: There are different solar panel manufacturing brands in the game. Better brands offer higher efficiency solar modules. The type of inverters matters too. Micro-inverters, for instance, are more expensive than string inverters, but they’re more efficient too. Putting it simply, the price of a solar system depends on the quality of the components used to put the system together.
- Module mounting structure – The cost greatly varies according to the height and material of the mounting structures. Many homeowners prefer a height of 6 to 8 feet so that there’s enough space to freely walk on the roof. Factors such as roof conditions, wind speed, and shadows from surrounding objects influence the cost too.
- Quality of installation – The method of installation (whether the structures are prefabricated or welded on site), the type of anchoring (chemical or mechanical), and even the type of cable dressing matters a great deal.
- After-sales service inclusions – Although maintaining a solar system doesn’t hurt the pocket, professional maintenance services are essential to ensure the health of a solar system. The cost of the solar system will again vary according to the AMC (annual maintenance contract) package you choose.
- Financing services – It is always wiser to buy a solar system on EMI for the best cash returns. The cost of your solar system will also depend on the EMI package you choose (6 months vs 12 months vs 36 months)
That said, since so many factors come into play, the price of solar systems is not fixed. It’s a range.
Here is the price range without a subsidy:
- 1 kW – ₹60,000 to ₹80,000
- 2 kW – ₹1,10,000 to ₹1,50,000
- 3 kW – ₹1,65,000 to ₹2,10,000
- 4 kW – ₹1,80,000 to ₹2,80,000
- 5 kW – ₹2,25,000 to ₹3,50,000
- 10 kW – ₹4,20,000 to ₹7,00,000
#2. State-wise solar panel subsidy in India
Now that you know the selling price range, it should be pretty simple to calculate the price of the solar panels after subsidy, right? Wrong!
Here’s what everybody says:
- You get a 40% subsidy on solar systems between 1 KW to 3 KW.
- You get a 20% subsidy on solar systems that are above 3 KW and up to 10 KW.
That’s incomplete information.
There’s a concept of discovered price, also known as L1 price. It is significant because you get a solar panel subsidy against the L1 price.
Different empanelled solar companies bid on your state’s residential solar subsidy tender. The company that bids the lowest gets the maximum allocation out of the solar installation capacity allocated to the state.
The lowest bid amount becomes the L1 price. This price also varies from state to state.
Here are the true subsidy calculation parameters:
- For a solar system between 1 KW to 3 KW, you get a 40% subsidy on the L1 price.
- For a solar system that is more than 3 KW and up to 10 KW, you get a 20% subsidy on the L1 price.
You can discuss matters with your solar installation company. Always consider parameters such as the shadow-free space on your rooftop and your power consumption to choose the right solar system for your home.
Did you know that a solar panel subsidy in India is offered for housing societies too? It’s 20% of the L1 rates for installations that are up to 500 KW. There’s no subsidy incentive offered to commercial establishments.
#3. State-wise subsidy programs
Uttar Pradesh: Out of all the states that run a government solar panel scheme, UP has the 7th largest rooftop solar power generation capacity installed in India.
The State Government announced a solar panel subsidy of Rs 15,000/kW for rooftop projects for residential installations.
Kerala: Under the government solar panel scheme, the Kerala state electricity board is offering up to 40% subsidy on L1 prices. The state has been allotted a 50 MW capacity installation target.
Maharashtra: MEDA (Maharashtra Energy Development Agency) manages the solar panel government subsidy scheme in Maharashtra. MEDA is offering up to 40% subsidy on L1 prices to residential customers.
West Bengal: Housing societies that have a contract demand of more than 500 KW have been advised by the state government to install rooftop solar systems. At least 1.5% of their total electrical load must come from solar.
Madhya Pradesh: The State Government is offering financial assistance up to 40% on L1 rates for rooftop solar systems up to 3 kW capacity. A capacity above 3 kW and up to 10 kW will receive a 20% subsidy on L1 rates.
#4. Major developments in the subsidy program
The government has been making efforts to bring out many new solar panel subsidy schemes. The latest effort comes in the form of the National Subsidy Scheme. On 30th July 2022, Prime Minister Narendra Modi launched a National Portal for Rooftop Solar where customers can apply for a subsidy.
All citizens can apply for a solar panel subsidy via the National Portal. No matter if your state doesn’t have a subsidy scheme yet, you are still eligible to apply for the solar panel subsidy in India.
Here is the subsidy rate card:
| Plant Capacity | Applicable Subsidy |
| Up to 3kW | ₹14,588/- per kW |
| Above 3kW and up to 10kW | ₹14,588/kW for the first 3kW; thereafter, ₹7294/kW |
| Above 10kW | ₹94,822 fixed |
Please note: This subsidy program is also known as the DBT program (Direct Bank Transfer). Consumers can apply for a solar panel subsidy through the National Portal for Rooftop Solar.
Here’s a further breakdown for a clearer perspective:
| Solar System Capacity | Subsidy Break down |
| 2.5 KW | Rs. 14588/- X 2.5 = Rs. 36,470/- |
| 3 KW | Rs. 14588/- X 3 = Rs. 43,764/- |
| 4 KW | Rs. 14588/- X 3 + Rs. 7294/- X 1 = Rs. 51,058/- |
| 6.5 KW | Rs. 14588/- X 3 + Rs. 7294/- X 3.5 = Rs. 69,293/- |
| 10 KW | Rs. 94822/- |
Please Note: The government caps the solar panel subsidy for residential rooftop installations (up to 10 kW) at Rs. 94,822.
For instance, if your solar system is 15 KW, you will get Rs. 94,822 as a subsidy, neither more nor less than that.
#5. The purpose and key benefits of a govt subsidy on solar panel systems
Whether it’s the State Subsidy Program or the National DBT Subsidy Program, the main objective is to encourage homeowners to install a rooftop solar system.
Since the upfront installation cost might be high for a common person, the government extends help in the form of a solar panel subsidy.
The key objectives for selling solar systems at subsidized rates in India include:
- Making solar panels affordable for homeowners.
- Popularizing the widespread use of solar power in order to cap carbon emissions.
- Reducing pollution.
- Reducing the dependence on fossil fuels.
State Subsidy Programme Vs. National Subsidy Programme
Here comes the biggest debate now: Which of the two is better – the state-run solar panel subsidy program or the National Subsidy Programme?
We’re bringing the genie out of the bottle. Here’s a quick comparison between the two.
| State Subsidy Program | National Subsidy Program |
| Who gets the subsidy amount? The solar installation company gets the solar panel subsidy amount since they pay the entire cost of the system installation to DISCOM upfront despite the customer paying them the installation amount minus the subsidy. | Who gets the subsidy amount? The consumers apply for the solar panel subsidy through the National Portal. They will get the subsidy amount directly in their bank accounts within 30 days after the commissioning of the solar system. |
| What’s the subsidy amount? 40% of the L1 price for 1 KW to 3 KW solar systems. 20% of the L1 price for solar systems above 3 KW and up to 10 KW. | What’s the subsidy amount? There is one fixed subsidy amount (shared in the table above). |
| Which solar company can you work with? A solar company empanelled by the State Government (you can find the list on your state’s discom website). | Which solar company can you work with? A solar company empanelled by the Central government (you can find the list on the National Portal for Rooftop Solar). |
Although both programs have the same objective, the National Subsidy Scheme (DBT) is the biggest initiative by the government to simplify subsidy programs in India.
Here’s why the DBT scheme wins the game:
- Customers with no subsidy program in their state can apply for a solar panel subsidy.
- The National Portal offers real-time tracking of the solar application.
- Customers will get the subsidy in their bank accounts within a month after the solar system is commissioned.
Conclusion
Although everybody uses the phrase solar panel subsidy, the subsidy is actually for the entire solar system, and you still have a chance to benefit from it.
The target of the Indian government is to install rooftop solar systems at homes that can produce 4 GW worth of solar energy by the end of December 2024. Once this target will be met, the government will not be providing a solar subsidy any longer.
Since solar power is the future and you’ll sooner or later install rooftop solar panels, why not do it now?
There’s still an option of getting financial help from the government in the form of a subsidy – you must grab the opportunity!
FAQs
Q. What’s better – the National DBT program or the State Subsidy program?
The National subsidy programme is certainly better – customers can track their application status, register their complaints, and can apply for a solar panel subsidy even if their state does not offer a subsidy yet.
Q. Are there any conditions to avail of the subsidy?
Yes.
- Solar panel subsidy in India is offered for made-in-India, ALMM-approved solar panels only.
- On-grid solar systems are the only candidates for a solar panel subsidy.
- Subsidy for residential solar is capped at 10 KW.
- Commercial settlements cannot avail of a solar panel subsidy. Only individual homes and housing societies are eligible.
Q. Is it necessary to buy a solar system at L1 rates?
No.
There’s a reason that most people choose to buy tier-1 solar modules – branded products have exceptionally high quality. They perform better.
The solar system you install is a personal choice. You should opt for good-quality solar components. Make it a point to choose a trusted solar company when planning to install a solar system for home in india government subsidy programs.
Q. Why do different solar companies have different installation costs?
The installation cost depends upon:
- The brand of the solar panels you choose.
- The type of solar panel you choose: monocrystalline or polycrystalline.
- The shadow-free space on your roof.
- The value-added services you choose to purchase.
In order words, installation cost varies because every customer has different requirements.
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