The decision of the Union cabinet to provide Rs 5,000 crore for residential and institutional solar rooftops in the next five years will give major fillip to renewable energy, provided power distribution companies ensure speedy payment to consumers.
The new scheme, providing capital subsidy of 30% to general category states and 70% to special category states of the north-east, could potentially revolutionise decentralised energy generation in India as it did in Germany, where solar energy accounts for about 40% of the total energy generation compared to India’s 6%.
Looking to fulfil India’s commitment under the Paris climate agreement, the government has set an ambitious target of generating 100,000 MW of electricity from solar panels by 2022.
Since the announcement of the target in 2014, as many as 26 states have released net metering (two-directional energy meter) policy. But the response of discoms and consumers has been lukewarm due to the high set up cost.
Setting up a 5 kV system capable of providing electricity to a two-bedroom house with an air conditioner could set you back Rs 5.5 lakh without batteries. With batteries, that cost goes up by another Rs 1.5 lakh.
“Unless there is easy finance or subsidy available, people will not opt for solar rooftops,” said an official of the ministry of new and renewable energy, adding that the latest scheme solves that problem to a certain extent.
The key to success of solar rooftops, as was seen in Germany, will be regular payments to consumers who adopt the new system. However, the experience in India has so far been far from ideal.
“Most power distribution companies are cash strapped and don’t have money to make payments. If people don’t get money on time, the solar rooftop scheme may not take off as the government has expected,” said K Srinivas, CEO of NGO Vasudha Foundation.
The states, on the other hand, are geared up to absorb the additional incentive from the Centre, with Chhattisgarh, Gujarat and Rajasthan making it mandatory for all government buildings to install rooftop solar panels. Earlier this year, Haryana made solar rooftops compulsory for all new buildings while Kerala announced financial incentives for the same.