Watch | One crore households to get 300 units free electricity every month through rooftop solarisation

Taking cue from Prime Minister Narendra Modi’s assurance following the Ayodhya temple consecration that one crore households will be electrified via rooftop solar installations, Union Finance Minister Nirmala Sitharaman in her Interim Budget 2024-25, reiterated that commitment. “Through rooftop solarisation, one crore households will be enabled to obtain up to 300 units free electricity every month…. this would translate to benefits of ₹15,000-18,000 annually for households from free solar electricity and selling the surplus to the distribution companies,” she said in her address.

The average all India household consumption of electricity is about 100 units a month, with only few States such as Delhi approaching close to 300 units, suggest public data. The net-metering policy allows users of rooftop solar power to supply their surplus power back to the grid and thus offsetting their electricity bills.

Budget 2024 updates

Whether the government would fund new installations or only subsidise those installing new ones — the latter has been a practice for years — and the demographic that the scheme was targeting was not specified in Ms. Sitharaman’s address.

Last year, the government spent ₹2,167 crore on its rooftop solar power programme and for 2024-25, it has budgeted ₹4,555 crore, according to the Budget documents updated on Thursday.

India currently has about 11 GW of installed rooftop solar capacity, of which only 2.7 GW are in residential units and the rest in commercial or industrial spaces. There is no centralised national estimate of how many of India’s estimated 30 crore households have rooftop solar units, though as The Hindu reported last month citing estimates from experts, it is unlikely to be over 10 lakh. The Finance Minister also did not indicate a time line for the installations.

Also read: Key takeaways from interim Budget 2024-25 in charts

The Ministry of New and Renewable Energy (MNRE) estimates the cost of installing a 1-2 kW (kilowatt) system at about ₹43,000 per unit. Units up to 3kW are eligible for a subsidy of about ₹14,000 per unit.

Limited consumption

India’s low uptake of rooftop solar systems is largely due to limited electricity consumption and existing subsidies for coal-fired electricity that make even subsidised solar power expensive, suggested the result of a research spanning 14,000 households across 21 States, a study by the Council on Energy, Environment and Water (CEEW) had reported in November 2023.

Neeraj Kuldeep, Senior Programme Lead, CEEW said in a statement on Thursday that 20-25 GW worth of rooftop solar capacity could be supported through solarisation of 1 crore households. Residential consumers receive subsidised electricity from distribution companies (discom) and were such households to ‘solarise,’ it would save discoms about ₹2 lakh crore over the next 25 years (the solar plant’s life). “All States can leverage this opportunity as rooftop solar potential exists everywhere, unlike utility-scale solar (solar parks), which is primarily restricted to seven RE-rich States, he added.

Because solar power is only available during the day and battery storage systems are expensive, the global experience with rooftop solar is that most households with solar panels also rely on electricity from the grid.

Ms. Sitharaman also announced a ‘viability gap funding’ to support the capital intensive offshore wind sector, of up to 1 gigawatt capacity. These are wind farms located in the sea.

Though no details or budgetary allocations were announced, it is expected to encourage private sector investments in the sector, with the government committing to pitch in with a portion of the required installation costs.

Sea-based windfarms are expensive but given that strong winds are more consistent in the sea, they are projected as being more reliable sources of wind power. India currently has about 44 GW of wind installation, all on land. Studies show a potential of almost 72 GW of offshore wind from the seas off Gujarat and Tamil Nadu.