Solar in India is rapidly reaching mainstream status and you can find solar products in the daily lives of people even without government subsidies. Here is a picture of an old man running a food stall, who I was surprised to find was using a solar panel to charge his mobile phone and LED light.

Tamil Nadu Solar Home Subsidy Offer

Coming back to the main topic, the TN government has come out with a good policy for promoting solar energy on homes. The government is giving a subsidy of Rs 20,000 for a 1 kilowatt solar installation on top of the Rs 30,000 subsidy, given by the federal government. This means that a Rs 100,000 installation for a solar system will have around 50% subsidy, which is a great deal for the customers. Given the high insolation in TN, it gives a ROI of 20% per year on an investment of Rs 50,000 for customers. Only the first 50,000 application will get this subsidy, so if you are living in TN then you better get in the queue quickly, as I think that this scheme will be exhausted quickly. People can use government empaneled solar vendors to get their systems installed.

TN is also seeing a burst of commercial solar systems as people are finding the accelerated depreciation benefit to be very rewarding. Note solar owners can also sell the electricity plus get Renewable Energy Certificates. So they don’t really need any other subsidy and are happy to get this subsidy combo. There is also a report by CRISIL that business owners are sharply undercutting dedicated solar IPPs like Welspun, Azure in state solar auctions. This is because they can use the accelerated depreciation measure to offset their profits while the IPPs cannot. Note India became the 5th largest wind energy producer in the world mainly due to the accelerated depreciation benefit. Solar energy too is getting wings from this subsidy measure.

From the Hindu

Solar investors such as JVS Exports will sell the power to other industries at negotiated rates. Solar electricity fetches around Rs 6 when sold directly to customers. They will also get ‘solar renewable energy certificates’ which can be sold in the power exchanges to entities that are obligated by law to buy the certificates (or electricity generated from renewable sources). The ‘third party sales + accelerated depreciation + REC’ model makes solar a good business to be in.