According to reports, the government is set to replace the existing capital subsidy programme for rooftop solar power projects with an interest subvention scheme to help accelerate the development of solar power projects in the country.
The new and renewable energy ministry has set an ambitious target of adding 100,000 mw of solar power in the country by 2022, up from the present level of around 3000 mw. Out of this, a significant 40,000 mw is set to come from rooftop solar projects where government feels there is a need to provide a support mechanism to keep costs down.
“The capital subsidy scheme has lived its utility and interest subvention would work best for the sector as this will help to reduce overall tariff from solar projects. The aim is to reduce effective interest rate for rooftop solar projects to around 8.5 per cent per annum that will help to reduce the levelised cost by around 10 per cent,” said a government official privy to the development.
The government has already indicated its intent to shift from capital subsidy structure to interest subvention scheme during the stakeholder meeting organised by MNRE on March 19, 2015.
Till now, the rooftop solar segment was offered cumulative 50 per cent subsidy in India. A subsidy of 30 per cent had been offered by the centre on capital cost, while the respective state governments are bearing 20 per cent. The rest is to be borne by the beneficiary.
The MNRE has already notified that its intent of reducing its share of 30 per cent subsidy to 15 per cent level. The reduced level of support now will be considered in the form of interest subvention.
Additionally, the MNRE is also pushing the finance ministry to get public sector banks on board to encourage home loan seekers to install rooftop solar units and to include the cost of such equipment in their loan proposals. Eight public sector banks have already issued instructions to give loans for such rooftop solar schemes.
All these efforts are to achieve an overall 100 gw target by 2022. Although, some details have started emerging on how the overall 100 gw target may be achieved, the country’s solar market is still waiting for a coherent roadmap for the sector. The MNRE officials are working on innovative ideas to see that the required Rs 8 lakh crore investment in the sector is realised.
“Although the MNRE has recently approved capital subsidy allocation for around 300 mw of rooftop projects being planned by SECI, state nodal agencies and institutions such DMRC and IOCL, we believe that it is in favour of completely scrapping the subsidy scheme,” Tobias Engelmeier , founder-director, Bridge to India, a strategic environmental consulting company, told Financial Chronicle.