Top 5 Incentives in India to foster Rooftop Solar

Solar energy is the technology trend of the decade. The electricity harnessed from the clean and green solar energy has reached its commercialization state and is all set to lighten up the world putting off the load on exhaustible fossil fuels. India has ample sunlight with about 300 clear sky and sunny days in a year.

April 20, 2021. By News Bureau

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Solar energy is the technology trend of the decade. The electricity harnessed from the clean and green solar energy has reached its commercialization state and is all set to lighten up the world putting off the load on exhaustible fossil fuels. India has ample sunlight with about 300 clear sky and sunny days in a year. The location and demographic of India makes it most suitable to deploy solar power systems and harness ample sustainable green electricity.

With all advanced technology and feasible commercialization, an ambitious target of 175 GW of renewable energy by 2022 is set by India, of which about 100 GW is set for solar power. Considering high upfront cost of solar PV system installation as a major issue, a lot of government aids are being provided to promote the rooftop solar PV system installations. Here, we discuss about the top 5 incentives in India to foster Rooftop Solar.

1. Capital Subsidies

Capital subsidies are provided to foster residential rooftop installations both in rural and urban areas. The SRISTI scheme targets solar rooftop installation in urban areas under which residential installations are provided with Central Financial Assistance as follows:

• CFA @ 40% for capacity up to 3 kWp • CFA @ 20% for capacity beyond 3 kWp and up to 10 kWp

• CFA @ 20% for GHS/RWA capacity up to 500 kWp (limited to 10 kWp per house and total upto 500 kWp) (Domestic manufactured modules and Solar cells to be used only to avail above CFA.)

The SUABHAGYA scheme targets solar rooftop installations mostly in the rural residents wherein free electricity connections to all households (both APL and poor families) in rural areas and poor families in urban areas are provided. About 4 Crore un-electrified households has been on the top priority of SAUBHAGYA scheme. It will benefit all the residents of the nation and promote the sale of Made in India products. Other schemes like IPDS (Integrated Power Development Scheme) are provided to DISCOMs to strengthen the power transmission and distribution networks in urban areas.

2. Tax Benefits

Direct and indirect tax benefits such as sales tax, safeguard or anti-dumping duty inclusions, excise duty exemptions and custom duty exceptions have been given. Project developers were exempted from income tax on all earnings from a project in its first 10 years of operation and accelerated depreciation (AD) for solar energy producers to claim 40% of the costs in the first year itself. It support domestic manufacturers who provide modules for rooftop solar PV systems.

3. Net Metering Incentives & Banking Charges

The electricity generated could also be used for self-consumption with the net metering approach. This mechanism allow two-way flow of electricity wherein the consumer is billed only for the net’ electricity supplied by the DISCOMs. The concept of Gross Metering was also brought up for C&I sector, whose resistance and predicted unsatisfactory economical prospect led to the clause of Banking Charges. As per the Banking Charges clause, the consumer is also billed for net units stored in the grid infrastructure for later use. The net-metering policy is a big hit and will benefit not only residential but C&I markets as well. However, new clauses like banking charges have been brought to sustain the economic eco-system.

4. Assured Power Purchase Agreement (PPA) PPAs are tri-party agreements signed between the investor, DISCOMs and regulatory authorities. The electricity generated from solar rooftop could be entirely fed into the grid at regulated feed-in-tariffs (FiT). State utilities guarantee the purchase of solar power through a PPA which offers a high price equal to that of peaking power on demand for solar power which is secondary power or negative load and an intermittent energy source on a daily basis. It will benefit those investors who put their un-used lands to use by setting up solar power plants.

5. Renewable Energy Certificates (RECs) RECs are tradable certificates that provide an incentive to those who generate green power by providing financial incentives for every unit of power they generate. The solar rooftop is eligible for issuance of RECs as specified under Central Electricity Regulatory Commission. It will benefit C&I sector to attain carbon neutrality.

The economics of solar power has improved in India. Presently, India reached 24 GW of installed solar power capacity, which was not even 1 GW in mid-2000s. Such policies will aid more and more installations of the vast rooftop solar capacity of India. It strategically covers both rural and urban areas and different market segments like residential, C&I.

- PIXON

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