Tamil Nadu’s new Subsidy for Rooftop Installations

The Indian State of Tamil Nadu had set a target of 350 MW of solar rooftop installation by 2015. To support this initiative, the state recently announced Rs. 20,000 subsidy per kilowatt, subject to a maximum of 10,oo0 rooftop installations. This subsidy is over and above the subsidy of 30% announced by the MNRE. Tamil Nadu had announced an aggressive 3,000 MW of solar energy installation by 2015 in its Solar Energy Policy. The state also wanted to promote rooftop installations and in order to achieve the same mandated the following:

I. Domestic Rooftop GBI

All domestic consumers will be encouraged to put up roof-top solar installations. A generation based incentive (GBI) of Rs 2 per unit for first two years, Re 1 per unit for next two years, and Re 0.5 per unit for subsequent 2 years will be provided for all solar or solar-wind hybrid rooftops being installed before 31 March, 2014. A capacity addition of 50 MW is targeted under this scheme.

Consumers desirous of availing GBI shall necessarily install separate meters to measure rooftop generation.

II. Promoting Rooftops in Government

All new Government/Local Body buildings shall necessarily install solar rooftops:

1. Existing Government/Local Body buildings will be provided with solar rooftops in a phased manner
2. All Street Lights and Water Supply installations in local bodies will be energized through solar power in a phased manner.

Why Rooftop solar systems are not getting built in TN 

There are some issues with Rooftop installation in Tamil Nadu

1) Very small Generation Based Incentive (GBI) with lack of clarity on payment – TN is targeting only 50 MW generation from rooftop sources which is only 5% of the total target and even for that it is offering a pitiable Rs 2 per kilowatt hour in the first two years, Re 1 in the next two and 50 paise in the following two years. This GBI barely will cover 5% of the solar system cost on a NPV basis.

2) MNRE subsidy exists but only on paper – The federal government gives a subsidy of about 30% for solar power systems for home but getting this subsidy through the bureaucratic red maze is an impossible task.

3) No financing support for small solar panel systems – The success of home solar rooftop systems in countries like Germany was due to the active support given by the banks like Kfw to finance rooftop solar systems. The procedures are so easy that you can get a loan in a couple of days. In TN getting this loan in a couple of months is an impossibility.

Why does India need to Shift its focus to Rooftop Installations

Solar Energy incentives in most of the developed solar markets in Europe have clearly shifted their preference to distributed small rooftop solar installations on residences. This is because it reduces the need for expensive power generation infrastructure, improves reliability and puts money in the hands of the common citizens. Spain, Germany and Italy which are the 3 biggest markets in the world have done this. India however has not paid any focus to rooftop solar installations except for Delhi. Electricity in India is not only expensive but also highly unreliable and of low quality. Low voltages and blackouts of 10 hours are not uncommon. Hence it is important that India realizes the importance of rooftop installation and take proper steps like Tamil Nadu to encourage the same.