Budget 2024: How to Apply for PM Surya Ghar Muft Bijli Yojana

India's ambitious targets for renewable energy have set the stage for a transformative shift towards solar power. Despite recent setbacks in meeting solar installation goals, the country is moving forward with renewed vigour, placing rooftop solar at the forefront of the latest solar energy initiative, the PM Surya Ghar Muft Bijli Yojana.

With an investment of over INR 75,000 crores, this scheme aims to accelerate the adoption of rooftop solar while providing up to 300 units of free electricity each month to 1 crore households.

The recent budget for the Financial Year 2024-25 introduces significant updates and implications for the scheme. The government has allocated INR 6,250 crores to support the initiative, contributing to a total solar energy budget increase from INR 6,041 crores last year to INR 16,394 crores this year.

The new budget presents both advantages and challenges for the scheme. The government has announced that certain machinery used in the production of solar cells and modules will no longer be subject to the basic customs duty (BCD) of 7.5 percent, which will lower manufacturing costs for producers. However, tinned copper interconnects will now incur a 5 percent custom duty, and solar glass used in the manufacture of solar cells or modules will be subject to a 10 percent custom duty starting October 1, 2024. These changes are expected to raise the prices of solar glass in the market, potentially increasing the overall cost of solar installations and posing a small hurdle for the scheme.

The PM Surya Ghar Muft Bijli Yojana has the potential to catalyse India’s solar revolution and help achieve the country’s 2030 renewable energy goals. In this article, we explore the benefits, eligibility criteria, and other perks of this scheme, and analyze its impact on India’s energy landscape.

PM Surya Ghar Muft Bijli Yojana

By switching from fossil fuels to solar power, the PM Surya Ghar Muft Bijli Yojana seeks to promote renewable energy and provide free electricity to homes, especially in rural areas. 

By lowering reliance on imports and diversifying energy sources, it plans to improve energy security. By generating jobs in the solar industry and building the infrastructure necessary for the production and distribution of solar power, the program also aims to promote economic development.

300 Units of Free Electricity Per Month

The PM Surya Ghar Muft Bijli Yojana offers numerous benefits that make it a game-changer for households. 

Under the scheme, households receive up to 300 units of free electricity per month, leading to substantial financial savings - estimated at INR 15,000 crore annually for 1 crore households. Beyond just free electricity, the scheme allows households to sell surplus power to local DISCOMs, generating additional income. The scheme also supports the growth of electric vehicle (EV) charging infrastructure, which is essential for the future of sustainable transportation.  

The program intends to increase household solar capacity by 30 GW, generating 1000 BUs of electricity and cutting 25 years' worth of CO2 emissions by 720 million tons. It is also expected to directly generate about 17 lakh jobs in manufacturing, supply chain, logistics, sales, installation, O&M, and other services.

Government Subsidies and Capital Support

PM Surya Ghar Muft Bijli Yojana is making solar energy accessible with the Central Financial Assistance (CFA) program for residential rooftop solar systems. 

The scheme offers a 60 percent subsidy on system costs for up to 2 kW and 40 percent for systems between 2 to 3 kW, capped at 3 kW. This translates to INR 30,000 for a 1 kW system, INR 60,000 for a 2 kW system, and INR 78,000 for a 3 kW system or higher, based on current benchmark prices. 

Eligibility Criteria

To benefit from the PM Surya Ghar Muft Bijli Yojana, applicants must be Indian citizens with a rooftop suitable for installing solar panels and an existing electricity connection. The scheme is open to individuals aged 18 years or older, with priority given to middle and lower-income households. Additionally, an Aadhaar-linked bank account is required for the disbursement of the subsidy, ensuring the process is streamlined and transparent.

Applicants need to provide several documents to qualify for the scheme. These include an Aadhaar card, proof of residence, a recent electricity bill, a bank passbook, a passport-size photograph, a ration card, an income certificate, and an affidavit. 

How to Apply?

Households can apply for this subsidy through the National Portal, where they can also find and choose from a list of approved vendors. The portal is designed to guide users through their decision-making process, providing details like appropriate system sizes, a benefits calculator, and vendor ratings. Plus, to make the transition even smoother, households can access collateral-free, low-interest loans - currently around 7 percent - for installing systems up to 3 kW.

Relevance to the Solar Market of India

Although India missed its 2022 solar rooftop target and the overall goal of 100 GW installed capacity by 2022, the launch of the PM Surya Ghar Muft Bijli Yojana has reprioritized rooftop solar (RTS) in the energy sector. 

The solar energy market in India experienced some fluctuations in the first quarter of 2024. The rooftop solar market saw a significant decline, with the installation of 367 MW of capacity. This represents a 10 percent decrease from Q4 2023 and a 24 percent drop from Q1 2023.

The downturn is largely attributed to residential consumers delaying installations in anticipation of the PM Surya Ghar Muft Bijli Yojana scheme, which increased the central subsidy for small systems. This surge in applications caused processing delays, further impacting capacity growth.

Despite these challenges, the industrial segment continued to dominate capacity additions, accounting for nearly 57 percent of installations. The commercial, residential, and government sectors contributed approximately 28 percent, 14 percent, and 1.1 percent, respectively. The government segment faced long approval processes and limited installer interest, which hindered its growth. Financial instruments have eased the burden for commercial and industrial (C&I) consumers, but awareness and access to solution providers remain significant hurdles.

States like Gujarat, Maharashtra, and Kerala led in rooftop solar capacity additions, with these top five states representing over 67 percent of new installations in Q1 2024. By March 2024, India’s total installed rooftop solar capacity reached 10.8 GW, with the top ten states accounting for more than 77 percent of this total. 

Notably, while there was a decline in new installations, rooftop solar tenders rose to nearly 817 MW, indicating strong future potential. The average cost of rooftop solar systems also continued to fall, decreasing by over 6 percent from the previous quarter and nearly 22 percent year-over-year.

Exploiting the opportunity, the scheme can be a missing piece of the puzzle for India’s solar game. Targeting rooftop solar in particular, it may help India come closer to its 2030 renewable energy target of 500 GW. One major perk of this scheme is India’s robust solar module manufacturing capacity. 

One of the scheme's strategic advantages is India's strong solar module manufacturing capacity. With 58 GW available and only 30 GW needed for the scheme, India is not only capable of meeting its own requirements but also has the potential to serve global markets. This surplus capacity ensures that the PM Surya Ghar Muft Bijli Yojana can move forward without the typical delays caused by supply shortages.

Financing Options for Solar Rooftop

The financing landscape for solar rooftop installations is evolving, but challenges remain. While there is high demand for solar installations, financing options are not uniformly available across all regions. Major banks and financial institutions are increasingly offering loans and credit facilities for solar projects, but accessibility and awareness need improvement. 

Organisations like Union Bank of India offer loan schemes specifically for solar energy projects with competitive interest rates. For instance, one snippet mentions an interest rate of 10.15 percent p.a. for loans over 3 KW but up to 10 KW capacity, and another source indicates interest rates starting as low as 7.99 percent with Ecofy's green finance.  Emerging financing models, such as solar leasing and power purchase agreements (PPAs), are gaining traction and making solar more affordable for consumers.

Grid-Connected Rooftop SPV Systems Can be Game-changer

Grid-connected rooftop solar photovoltaic (SPV) systems offer several advantages. They provide cost savings by reducing electricity bills and allowing households to sell excess power back to the grid. These systems ensure a reliable power supply and decrease the carbon footprint by utilising clean, renewable energy. 

Energy independence is another benefit, reducing dependence on the grid. Rooftop installations are typically quicker and easier to deploy compared to large solar farms.

Engaging Enormous Solar Rooftop Potential of India

Muft Bijli Yojana initiative has taken off with 2 lakh installations, 1.28 crore registrations, and 14 lakh applications until Q1 2024. These numbers highlight the potential for solar energy in India. To hit the goal of 1 crore installations, the Ministry of New and Renewable Energy (MNRE) is ramping up its Information, Education, and Communication (IEC) campaigns. They aim to connect with potential applicants and spread the word about the benefits of going solar.

India has immense potential for solar rooftop installations. With an average solar irradiation of 4-7 kWh/m²/day, the country is well-suited for solar power generation. As per one Council on Energy, Environment and Water (CEEW) report, India has over 630 GW of rooftop solar potential, just one-third of which could support the entire electricity demand of the Indian residential sector.

As of March 2024, India’s total installed rooftop solar capacity is roughly 11 GW, with the top ten states accounting for more than 77 percent of this total. This indicates substantial room for growth.

The PM Surya Ghar Muft Bijli Yojna is a game-changer for India's energy sector. It promises free electricity, improved energy security, and environmental advantages by utilising solar power. Even though there are many prospects, the success of this initiative depends on resolving funding issues, increasing public awareness, and securing strong policy support. India's solar rooftop industry has a promising future with sustained efforts to pave the road for a more sustainable and environmentally friendly society.