Tamil Nadu’s 10,000 solar rooftop policy: A winning proposition for residential consumers

Tamil Nadu’s 10,000 solar rooftop policy: A winning proposition for residential consumers

The Government of Tamil Nadu released a new scheme called the 10,000 solar rooftop scheme for domestic consumers on 2nd December 2013 (click here to access the scheme, and here to access the corrigendum document). The highlights of this scheme are:

  • The scheme is restricted to battery-less grid-tied systems. This is unlike Kerala’s 10,000 rooftop scheme which is restricted to off-grid (battery based) systems.
  • Tamil Nadu Government will provide a capital subsidy of INR 20,000 per kWp in addition to the MNRE subsidy (30% of the benchmark capital cost of INR 100,000 per kWp). This amounts to nearly 50% of the system cost. Unfortunately, the Tamil Nadu Govt. does not assume any responsibility for claiming the MNRE subsidy. This is left entirely unto the developers.
  • There is a Domestic Content Requirement (DCR) for PV modules for the entire allocation.

This policy comes immediately after the net metering policy was announced on 3rd November 2013 (read our analysis of the net metering policy here). The policy is aimed at LT-1 category residential (domestic) consumers. The total planned capacity is 10,000 rooftops x 1kW = 10 MW.

The scheme has significant variations over Kerala’s rather successful rooftop scheme. The following table summarizes the comparison:

Comparison of 10,000 rooftop scheme of Tamil Nadu and Kerala

Although the capital subsidy structures of both Kerala and Tamil Nadu are similar, the process of claiming this subsidy varies. The nodal agency of Kerala, ANERT already have the funds pre approved from both the MNRE and the Govt. of Kerala and is responsible for disbursing the funds to successful projects. However, TEDA, the nodal agency in Tamil Nadu does not assume responsibility in obtaining the MNRE subsidy and leaves it entirely unto the developers. BRIDGE TO INDIA reported earlier that the MNRE is facing a severe shortage of funds and its 30% capital subsidy program has been put indefinitely on hold (read our blog post here). Tamil Nadu’s 10,000 rooftop scheme requires developers to bear the subsidy risk. It is unlikely that developers would be willing to do so.

While the earlier policy on net metering allows domestic users to avail Generation Based Incentive (GBI) of INR 2.00/kWh for first two years, INR 1.00/kWh for next two years, INR 0.50/kWh for the subsequent two years , this policy does not allow GBI and capital subsidy (TEDA or MNRE) to be simultaneously availed. It therefore appears that consumers have two options.

Option 1: Net-metering with capital subsidy from Tamil Nadu State Government and MNRE

Option 2: Net-metering with Generation Based Incentive (GBI) (see our earlier blog post for more details)

From a purely economic standpoint, option 1 seems to be a better proposition since nearly 50% of the cost of the system is received upfront. However, it is unclear whether the Government of Tamil Nadu will grant subsidy if the MNRE subsidy doesn’t come. The Government of Tamil Nadu can take a leaf out of the neighboring state of Kerala and ensure that both subsidies are already available before it grants project applications. Despite these shortcomings, the policy is in the right direction.

Akhilesh Magal heads the Project Development team at BRIDGE TO INDIA. He likes to present his opinion on the policy environment in solar in India.

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