Sunday, 2 December 2012

Solar Energy Power - 30% Subsidy in India

Solar Energy Power Project - 30% Subsidy in India

Photo Voltaic Solar Power - although considered quite expensive is actually becoming practical and viable with falling prices in cost of generation. This is mainly attributed to the significant cost in fall of PV Modules - which form a significant component of the project cost. There are various stages of a Solar Energy Power Project.

Considering the potential of PV Solar for a power deficit and Solar-rich country like India the Government has announced various subsidies and incentives in order to make the project viable. However a PV Solar Power Project can become viable even in the absence of subsidies (Can a Solar Project become financially viable without subsidies / incentives?). Mainly for Industrial Plants which are already facing a high power price (which directly impacts the cost of production) with majority of the plants opting for a D.G. Set for regular use.

Jawaharlal Nehru National Solar Mission (JNNSM) announced in 2009 is one of the 8 missions part of National Action Plan for Climate Change (NAPCC). Interestingly in 2009 the cost of generation from PV Solar was significantly higher (nearly twice of what it is today). Moreover the same was also very high as compared to grid power price. In 2012 nearly all the States in India have significantly hiked the power price ranging from 4% to 15%. It is anyone's guess that Solar Power will play a significant role in the Power Scenario of India.

(Recommended Reading - Solar Energy OPEX / RESCO vs CAPEX - which is the right one for you?)

Additionally in the present context owing to rise in deficit in electrical power, unreliable power supply in major parts of the Country, issues in Coal supply (recently some of the TPPs had critically low coal stock of less than a week) there is a rising interest in Solar Power. This interest is boosted by the fact that power generation from Solar enjoys several financial benefits - which no other technology enjoys in India.

Solar Energy Power Project
Fig. 1 Mumbai's first ever rooftop Solar Project commissioned in 2011

The incentives and subsidies for a PV Solar Power Project are of various kinds and depend on factors such as -
  • Size of the Project.
  • Location of the Project.
  • Type of Project (Captive Consumption / Grid-Feed / Off-Grid etc.).
(Interesting to know facts - Solar Energy Projects - Why do they fail?)

Although the type of incentives could be dynamic i.e. benefits achieved over a period of time or could be static i.e. one-time upfront subsidy received from the Government. The other incentives - although much more beneficial - are quite complex to be covered here. The same is generally covered as part of our comprehensive report prepared for a Client. The Project IRR in such cases is in the range of 16% to 20% and Equity IRR is 80% and above. To know more please send a mail to
The simplest form of subsidy is 30% capital subsidy by MNRE.

Following are the basic MNRE guidelines for this -
  1. Project should not exceed 100 kWp installation (single location).
  2. Project could be off-grid or grid-synchronized.
  3. Power cannot be fed to the grid i.e. it has to be for captive consumption only.
  4. Battery backup is optional. The subsidy for projects with and without battery is different - MNRE adjusts subsidy amount for higher project cost due to battery.
  5. Project should be preferably executed by MNRE empanelled vendor.
Our Group is an empanelled MNRE vendor for execution of such projects and availing 30% subsidy directly from MNRE. Contact us to know more or you can directly drop a mail to

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