Weekly Update: Tamil Nadu to announce an initiative for promoting residential rooftop solar installations

Tamil Nadu is expected to issue guidelines for subsidy to be provided to residential rooftop systems in the state (refer). This is expected to be similar to the rooftop solar scheme earlier announced in Kerala (refer). Domestic consumers will shortly be able to send their applications online to the Tamil Nadu Energy Development Agency (TEDA), the installers empaneled by the state, like in Kerala, will carry out the installation of systems. However, these systems are expected to be grid-tied and without any storage, unlike in Kerala.

A domestic consumer will have to pay INR 50,000 after getting government subsidies for rooftop solar systems
The key issue with the rooftop solar policy in various states is that they rely on MNRE subsidy scheme
Feed-in-tariff (FiT) based system is better from a customer’s perspective

A subsidy of INR 20,000/kWp will be provided by the state government. This is expected to be in addition to the 30% capital subsidy available from the MNRE. Assuming that the system cost is INR 100,000/kWp, a domestic consumer, will effectively have to pay INR 50,000 after the subsidies. At this price, the payback period for the system is expected to be around five years. For the budget that has been sanctioned for this initiative, around 5,000kWp is expected to be installed in total.

Uttarakhand had earlier announced a policy for rooftop installations but that is based on a generation based incentive and not on upfront subsidy (refer). Gujarat and Andhra Pradesh are also known to be working on a policy similar to that in Kerala and Tamil Nadu.

The key issue with these policies is that they all rely on the MNRE subsidy scheme. In the last one year we have seen that the MNRE scheme has not been working as planned (refer). Therefore, the future of all these policies is linked to the success of the MNRE subsidy scheme, which itself is in doubt. Moreover, it is generally believed and BRIDGE TO INDIA has shown it in an analysis (refer to the report), that a feed-in-tariff (FiT) based system is better from a consumer’s perspective.

There might be a lot of room for an improvement of these policy initiatives but India needs more distributed systems and these policies are already laudable steps in the right direction.

This post is an excerpt from this week’s INDIA SOLAR WEEKLY MARKET UPDATE. Sign up to our mailing list to receive these updates every week.

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