India is rapidly expanding its solar energy capacity, with an ambitious target of reaching 100 GW by 2022. A key part of this solar expansion is rooftop solar, which has huge potential in a country with abundant sunlight and millions of flat roofs. To accelerate rooftop solar adoption, the Indian government and various state agencies offer generous subsidies and incentives.

In this comprehensive guide, we will look at all the key solar rooftop subsidies available in India as of 2024, who is eligible, how to apply, and tips to maximize your savings.

Overview of Solar Rooftop Subsidies in India

The following are the major national and state-level rooftop solar subsidies currently available in India:

• Central Financial Assistance (CFA) from MNRE: Up to 40% subsidy for rooftop solar for residential and government/institutional sectors.
• Subsidies from State Nodal Agencies: Additional capital subsidies from states like Maharashtra, UP, Gujarat etc.
• Income tax deductions: Accelerated depreciation and interest deductions.
• Net metering incentives: Bill credits for exporting excess solar power to the grid.
• Low-interest finance: Concessional loans from banks/NBFCs.

The subsidies and incentives can cover 30-60% of your rooftop solar costs depending on the state you reside in. Let’s look at each of these in detail.

MNRE Central Financial Assistance (CFA)

The Ministry of New and Renewable Energy (MNRE) offers Central Financial Assistance or CFA of up to 40% of the benchmark cost of a rooftop solar system. This subsidy is available for:

• Residential sectors: 40% CFA for rooftop systems up to 3 kW capacity.
• Government/institutional sectors: 40% CFA for systems up to 500 kW capacity.

The CFA is provided through State Nodal Agencies appointed by respective state governments. The current benchmark costs per kW are ₹54,000 for residential and ₹48,000 for government/institutional rooftop solar projects.

So for a 5 kW residential rooftop solar system costing ₹2.5 lakhs, the MNRE CFA would be:

• System Size: 5 kW
• Benchmark cost: 5 kW x ₹54,000 per kW = ₹2.7 lakhs
• CFA @40% of benchmark: ₹1.08 lakhs

Thus the homeowner gets ₹1.08 lakhs upfront subsidy on installation, reducing net outlay to just ₹1.42 lakhs.

Eligibility for MNRE CFA

To avail the MNRE rooftop solar subsidy, following eligibility criteria must be met:

• Installation should be grid-connected with net metering tie-up.
• Use of solar panels and inverters approved by MNRE under ALMM list mandatory.
• System must conform to MNRE technical standards and specifications.
• Subsidy applicable for plants installed through empaneled vendors/installers.
• CFA disbursed only after installation and commissioning.

So check if your rooftop solar installer is an MNRE empaneled vendor before you proceed. Overall the CFA offers a big boost to residential consumers looking to adopt rooftop solar.

Additional State-Level Capital Subsidies

Apart from the MNRE subsidy, several states offer additional capital incentives to further reduce the cost of rooftop solar systems.

Maharashtra

Maharashtra offers a 25% subsidy (up to ₹1 lakh) for 1-10 kW residential rooftop solar under its Majhatma Jyotirao Phule Jan Awas Yojana (MJPMJAY). This is over and above the 40% MNRE CFA.

Total subsidy in Maharashtra = 25% state subsidy + 40% MNRE CFA

Uttar Pradesh

UP provides a capital subsidy through UPNEDA ranging from ₹15,000 per kW (below 3 kW) to ₹12,000 per kW (above 10 kW). This is applicable for residential, institutional and industrial rooftop solar installations.

Gujarat

Gujarat offers a ₹20,000 per kW subsidy for rooftop solar, subject to a maximum of ₹1 lakh per project. The state also provides interest subvention of 3% on loans for rooftop solar.

So check with your state nodal agency or electricity board for any additional capital incentives before installing rooftop solar. This can help bring down your net costs considerably.

Accelerated Depreciation Benefit

Rooftop solar systems are eligible for accelerated depreciation allowance of 40% of asset cost in the first year of commissioning. This can be claimed as deduction under income tax laws to shield taxable income. This benefit is available for residential systems not claiming MNRE capital subsidy.

For a ₹5 lakh rooftop solar system, accelerated depreciation benefit is:

• Asset cost: ₹5 lakhs
• Depreciation @40% of asset cost: ₹2 lakhs
• Tax savings @30% tax rate: ₹60,000

So a householder in the 30% tax bracket can save ₹60,000 in income tax in the first year through accelerated depreciation. This further improves the return on investment for rooftop solar power.

Interest Subvention on Loans

Banks and NBFCs offer loans at subsidized interest rates of 5-6% for rooftop solar installations. The State Bank of India offers rooftop solar loans at just 6.5% interest currently.

Additionally, a 3-4% interest subvention on these loans is provided by the Indian Renewable Energy Development Agency (IREDA) or respective state nodal agencies.

This makes financing costs for rooftop solar very affordable and helps accelerate adoption. Consumers can repay the loan easily from savings on electricity bills.

Net Metering Incentives

All states now have net metering policies allowing grid connectivity and sale of excess solar power. This enables rooftop solar users to get dirct bill credits for units exported. Typically you are paid at the same retail rate you pay for grid power purchase.

For a household with 50% solar power utilization on-site, excess generation is automatically fed into the grid, offsetting 50% of electricity bills. In Delhi for instance, the electricity board pays ₹10.5/kWh for net metered solar power – attractive savings for consumers.

How Much Rooftop Solar Subsidy Can You Get Overall?

By combining the 40% MNRE subsidy, state capital incentives, accelerated depreciation, low-cost loans and net metering benefits, consumers can cover 30-60% of their rooftop solar power costs.

• For an industrial consumer in Uttar Pradesh installing a 500 kW rooftop system costing ₹2.5 crores, the total subsidy would be:
• MNRE CFA: 40% of ₹2.4 crore benchmark = ₹96 lakhs
• UPNEDA capital subsidy: ₹12,000 x 500 kW = ₹60 lakhs
• Total subsidy: ₹1.56 crores
• For a residential 5 kW system in Maharashtra costing ₹2.5 lakhs, the total subsidy would be:
• MNRE CFA: 40% of ₹2.7 lakhs benchmark = ₹1.08 lakhs
• Maharashtra state subsidy: ₹1 lakh
• Total subsidy: ₹2.08 lakhs

This results in out-of-pocket costs of just ₹44 lakhs and ₹42,000 respectively for the above cases – making rooftop solar very affordable.

How to Apply for Solar Rooftop Subsidies in India?

The application process for availing rooftop solar subsidies in India involves the following steps:

• Choose a rooftop solar installer:- Select an experienced installer who is empaneled with MNRE and state nodal agencies. Get multiple quotes to compare pricing.
• Sign agreement and pay token advance:- Sign a project agreement and pay a token advance to the installer (typically 10-20% of project cost).
• Installer submits subsidy application:- The installer will submit the subsidy application to MNRE/state nodal agency on your behalf with all details.
• Receive project sanction:- On approval, the nodal agency will issue a project sanction letter specifying the eligible subsidy amount.
• Pay balance amount to installer:- Make balance payment to installer as per agreement to proceed with rooftop solar installation.
• Commission project:- Installer completes installation, secures net metering, and submits commissioning report.
• Claim subsidy:- Nodal agency releases CFA/subsidy to your account after verification and inspection.

National Portal for Rooftop Solar – Ministry of New and Renewable Energy

So the process is very straightforward provided you choose a reputed rooftop solar installer who handles all the paperwork. Make sure to check accreditation and experience before selecting an installation partner.

Tips to Maximize Rooftop Solar Savings

Here are some tips to maximize savings from your rooftop solar installation with subsidies:

• Size your system optimally:- Aim for 100% solar usage on-site to maximize self-consumption and lower grid dependence.
• Energy efficiency first:- Reduce your overall electricity usage through LED lights, efficient appliances etc.
• Claim tax benefits:- Don’t forget to claim accelerated depreciation and interest deductions for added savings.
• Sell surplus solar power:- Export excess solar power through net metering at attractive rates under your state policy.
• Monitor your system:- Use monitoring software to track performance and take corrective actions.
• Maintain your system:- Conduct annual maintenance checks for peak performance.

Following these best practices will help you get the most in terms of free electricity and reduced bills from your rooftop solar investment.

Conclusion

India offers one of the most generous rooftop solar subsidy regimes in the world currently. Capital subsidies of 30-60% are available along with accelerated depreciation, discounted loans and net metering incentives. Both residential and institutional consumers can benefit from these to adopt solar in a big way.

Run the numbers carefully based on your specific state, electricity consumption, available roof space and usage patterns. The right-sized rooftop solar system with subsidies can eliminate 50-90% of your monthly electricity bill while insuring against rising tariffs.

With national and state governments committed to achieving the ambitious target of 40 GW of rooftop solar by 2022, subsidies can only be expected to increase. Grab the opportunity and go solar to reap maximum benefits while supply lasts!

Frequently Asked Questions on Solar Rooftop Subsidies