Custom & Excise Duty Relief to Rooftop Solar Developers in India

Will Duty exemption Boost Rooftop Solar in India

In yet another move to boost rooftop solar in India, the Union ministry of new and renewable energy (MNRE) has decided to grant custom and excise duty exemption on materials used in solar rooftop projects with immediate effect. This comes after a long time of struggle between solar power developers and MNRE. Developers largely use imported modules for solar installations as they are about 10% cheaper than the local make.

The availability of land is the biggest constraint for large- and medium-scale grid-connected solar power projects. Rooftop solar greatly solves this problem. It is highly recommended to install rooftop solar especially in cities and urban areas where availability of large masses of land is a challenge. Another advantage of going Rooftop solar is that no separate transmission facility is required and there is more grid stability. Hence rooftop solar has been encouraged by the Indian government.

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Who is eligible for the exemption?

Rooftop solar PV power projects up to a minimum capacity of 100 KW as a single project or bundled project.

Benefits of exemption

The custom and excise duty exemption on materials used in rooftop solar projects in India will help to bring the cost down thus making it more attractive. The exemption in duties is expected to bridge the gap between the prices of imported and locally manufactured solar components.

Existing Subsidies

There is a 30% capital subsidy from the MNRE for solar rooftop systems in homes, educational institutions, hospitals, etc. States might choose to provide an additional subsidy if required. There exist net metering options, achievement linked scheme and more. However, the capital subsidy exists on paper only and mainly for government organizations.

You can read in detail about the various subsidies of rooftop solar in India.

The government both at the state and central level has implemented a number of ways to promote rooftop solar in India like capital subsidies, accelerated depreciation, launching the Surya Mitra program, solar cities, various online portals, and empanelling agencies for rooftop installation etc.

In spite of the government taking various measures to promote rooftop solar in the country, it still remains in a languished position. This is because of below mentioned reasons.

Problems of Rooftop solar in India:

• Difficult to get financing for small businesses and residential structures
• Weak rooftop structure with less available area for panel installation
• The rule of contract is not that strong and become a big issue in the PPA model
• Subsidized electricity already exists for homeowners and small businesses

Though the sector is plagued with the above mentioned problems, rooftop solar is the only solution available for eradicating the problem of power shortage not only in urban areas but mainly in rural areas. Currently rooftop solar accounts for about 10% of the total installed capacity in India which suggests there is enough room for growth available in this segment.

The duty exemption is a good step taken by the government to boost rooftop solar in India. We hope the plan is successful this time.

Out of 100 GW of India’s solar installation target by 2022, 40 GW is planned from the solar PV rooftop system. However, the performance of this segment has been dismal with India installing just 1 GW at the end of 2016. Leading states adopting solar rooftop model are Tamil Nadu, Gujarat and Punjab.

Read about the world’s largest rooftop solar power plant in Punjab.