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Solar rooftop systems subsidy will remain at 30%

According to reports, solar rooftop systems will continue to be subsidized by 30%, despite the Union ministry of new and renewable energy (MNRE)’s June announcement of hacking it by half.

Industry experts are not thrilled about the decision, citing state incompetency in doling out the subsidy on time, possibility of poor quality products from suppliers while leaving manufacturing costs unchanged.

The recent announcement from the ministry mentions that the subsidy comes under the Central Financial Assistance (CFA) scheme and is part of the ‘Grid Connected Rooftop and Small Solar Power Plants Programme’.

In September, the Maharashtra Electricity Regulatory Commission (MERC) had also announced guidelines which would let people with solar rooftop systems to connect to the grid.

The recent November notification and subsidy revision comes as a modification of the June 26 circular.

While MNRE has set a target for installation of 100 GW solar power, with a 40% chunk of grid-connected solar power, a subsidy of 30% will be given to all in general categories, who have connected their solar rooftop systems to the grid.

Commercial and industrial establishments have clearly been excluded from the 30% subsidy, citing reasons that such establishments are “eligible for other benefits such as accelerated depreciation, custom duty concessions among others.”

Experts have confessed themselves unhappy at the move, stating that, in the past, the government failed to disburse the subsidy on time. Subsidies worth Rs 375 crore are reportedly pending with the government since 2012.

“First, this sector does not require subsidy, and secondly, any subsidy leads to inferior products, not to mention the government’s record of not being able to disburse subsidies on time. Instead of increasing the subsidy, they could have come out with a low interest finance scheme,” said Jaideep Malaviya, an expert on solar systems.

“Our calculations show that the high cost of finance in India nearly doubles the project cost and enhances the payback period. Secondly, subsidies lead to lower quality as suppliers take undue advantage, while it also does not motivate the manufacturers to bring down the costs,” said Malaviya.

Ashwin Gambhir from Prayas energy group, said “While commercial and industrial establishments have been excluded from the high subsidy, the government should also note that loans for setting up solar rooftop systems should be made easier.”

“Facilitation of the processes should be made easier and quicker – such as processing of application forms,” he added.

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