The Aakhya Weekly #95 | Children of the Sun

In Focus: India’s ambitious rooftop solar programme

By Sujaya Sanjay

India’s got big, big plans for harnessing solar power.

On 13 February 2024, PM Modi launched the PM Surya Ghar: Muft Bijli Yojana—a scheme for consumers to bring down electricity bills by drawing power from solar panels installed on the house rooftops for electricity consumption. The scheme was approved on 29 February with an outlay of Rs. 75,021 Cr. This is expected to bring down the median consumer’s electricity costs to nearly zero—benefitting over 90 percent of consumers, according to market research experts.

What is the PM Surya Ghar Yojana?

The scheme, which is being administered by the Ministry of New and Renewable Energy (MNRE), offers subsidies for installation of rooftop solar systems, capped at 3kW which is expected to produce about 250kWh per month. Eligible applicants may avail a central financial assistance (CFA) of 60% of the system cost for systems upto 2kW capacity and 40% of additional system cost for 2-3kW capacity systems.

To avail of this scheme, citizens may register on a national portal and register for the subsidy, as well as choose from a list of registered vendors for installing the rooftop solar system. The portal also provides useful information that helps applicants choose the appropriate system size for their household, vendor ratings, and a calculation of the benefits that the household will accrue from feeding excess power back into the grid. The MNRE expects that these installations will yield up to 300 units of free electricity per household.

The Government is aggressively pushing this scheme and encouraging more people to apply for the subsidy, guaranteeing a drastic drop in electricity bills while harnessing clean, renewable energy. It has also been pointed out that in addition to rooftop solar installation, greater electric vehicle (EV) adoption will create further savings for consumers, because they can charge their vehicles at home. PM Modi in a recent interview stressed on the need to switch to EVs, to reduce dependency on petroleum imports for India’s vast populace while simultaneously contributing to a cleaner environment.

Policy overhaul, uptick in registrations

As of mid-March, over one crore households have reportedly registered for this scheme. To encourage registration, the MNRE notified amendments to the Electricity (Rights of Consumers) Rules, 2020. The amended rules ease the procedural hurdles and reduce timelines in applying for rooftop solar projects, while also mandating discoms to provide separate connections for EV charging in metropolitan cities like New Delhi and Bangalore.

India’s solar panel manufacturing process is largely restricted to the final stages of assembly, where imported solar cells are integrated into a larger panel. Investments in battery storage technology and solar panel manufacturing could give India the edge she needs to transition into renewable energy whilst reducing import dependence in this crucial sector. Large corporations like Tesla, which have access to cutting-edge battery storage technology, have also reportedly expressed an interest in being part of the programme, though no formal announcement has been made yet.

Everything about this scheme sounds pitch perfect. It’s a great initiative for the average consumer, a symphony to the middle-class ears, a siren call for investors in renewables, and a green light (literally) for businesses aiming to become carbon neutral by 2030.

What’s the catch?

While the registration of one crore households (if true) is encouraging, mass adoption of rooftop solar is still a long way away. Limited awareness about schemes like Surya Ghar leads to sluggishness in public response. Moreover, in cities like Delhi, electricity is already heavily subsidized (with up to 200 units per month being free of cost). Keeping the average monthly consumption of electricity at around 375 units per month, the upside is somewhat limited for consumers to participate in the programme.

There is also a fair bit of resistance from the distribution companies (discoms), who generate revenue from household electricity consumption. The rooftop solar programme also provides for net metering. This puts discoms in a position where, in addition to foregoing revenue from the consumer, now has to purchase surplus power generated by her household through the rooftop solar panels. Further, a household opting for the scheme will get a much lower rate for purchase of solar power by the discom due to being in the low tariff slab. This compounds the issue as discoms will be purchasing the surplus solar power at different rates from different households.

Ideally, State regulators ought to fix one rate for purchase by discoms. Fixing the optimal power purchase rate will be tricky: the rate has to be lower than the cost of power supply by the discom or they will not be incentivized to buy it, but it can’t go too low or the consumers won’t be incentivized to install rooftop solar.

It’s always sunny in India

Luckily for us, the sun isn’t going anywhere. It is quite natural for the adoption to be slow at first (as is the case with renewables across the board). As EV adoption increases, the demand for more cost-effective power generation is bound to grow. With the right incentive structures, which may take some more consideration, Indian households will gradually take to rooftop solar installations, paving the way for a cleaner environment while reducing the burden on the consumer’s pocket.

Top Stories of the Week

Government saves 3.35 lakh crores by removing fake accounts

Between fiscal year 2018 and fiscal year 2024, the Indian government successfully identified and removed fraudulent beneficiaries from various schemes, resulting in savings of about ₹3.35 lakh crore for the national treasury. The focus was on eliminating fake beneficiaries from programs aimed at food security, rural employment, and fuel subsidies. Overall, the government has transferred ₹35.5 lakh crore to beneficiaries since 2014, and reports have stated that many of these accounts have turned out to be fraudulent, causing significant losses to the government. 

To remedy this problem, the government's strategy involved close collaboration with state governments and emphasised leveraging technology to detect and prevent leakages. Key actions included eliminating 50.1 million fake ration cards, 41.3 million bogus LPG subsidy recipients, 700,000 false names from the Mahatma Gandhi National Rural Employment Guarantee Scheme, and 17.3 million fake beneficiaries from the PM Kisan scheme. Additionally, a special drive in May 2023 targeted leakages in the fertiliser subsidy, resulting in substantial savings. 

This action saved ₹180,000 crores in the public distribution system, ₹73,440 crores in LPG, ₹42,520 crores in NREGS, ₹22,106 in PM Kisan, and ₹11,000 crores in fertilisers. These efforts led to a significant decrease in direct benefit transfers (DBT), with a 20.75% reduction in FY24. These efforts underscore the government's commitment to fiscal discipline, transparency, and efficient utilisation of resources across welfare schemes.

Your Health Matters: BIS QCO for the Portable Water Bottles

The Indian government has taken a commendable step towards safeguarding consumer health and bolstering domestic manufacturing with the introduction of the Portable Water Bottle Quality Control Order (QCO) of 2024. This initiative, spearheaded by the Department for Promotion of Industry and Internal Trade (DPIIT), mandates compliance with the Bureau of Indian Standards (BIS) for all vacuum-insulated and portable stainless steel water bottles. This ensures a baseline quality benchmark, fostering trust and reliability in a market often saturated with cheap, potentially harmful imports.

While Indian brands hold a significant market share, a concerning trend has emerged. Many haven't established local manufacturing facilities, relying heavily on cheaper, often lower-grade materials from China. This undercuts not only domestic production but also poses a potential health risk. The QCO addresses this disparity by demanding the use of BIS-approved, food-grade steel (grade 304) – a stark contrast to the questionable grade 204 steel found in some imports.

Undoubtedly, the allure of low prices is a powerful market force. However, the government's resolve is unwavering. A six-month grace period has been implemented to allow for a smooth transition. Post this window, only BIS-compliant materials will be permitted for import. This ensures a level playing field for domestic manufacturers who prioritize quality and protects consumers from potentially harmful products.

The stainless steel water bottle industry stands at a crossroads. The QCO presents an opportunity to prioritize quality and safety, fostering a market brimming with trustworthy options. While some may resist this shift, prioritizing public health and encouraging domestic production are undoubtedly steps in the right direction. This initiative paves the way for a future where consumers can choose water bottles with confidence, knowing they are not just quenching their thirst but safeguarding their well-being.

A Few Good Reads

• Timothy B. Lee uncovers the tangled web of tech journalism, highlighting how scandals, sensationalism, and shoddy research leave reporters and readers entangled in a digital web. 

• Shashi Shekhar Vempati critiques Rahul Gandhi's "X-ray" approach, warning against its potential to deepen divisions along caste lines and jeopardize economic prospects.

• Suresh Prabhu and Shobhit Mathur propose revamping public policy education to empower citizens and foster future leaders for a more responsive policymaking ecosystem. 

• India's West Asia policy is like walking a tightrope between Israel and Arab states, hoping for the best while avoiding taking sides, as suggested by Shyam Saran in this piece.

• Bappaditya Mukhopadhyay emphasizes, "Start with the right to a clean environment and think incentives all the way through" when tackling the planet's crisis.