MNRE takes us by surprise 30% subsidy back in solar Power Plant

There has been an unexpected shift in the thinking of the MNRE (Ministry of New and Renewable Energy) about subsidies. In the past few (recent) meetings, MNRE hosted for its channel partners it was apparent that the subsidy would be withdrawn completely for all customer segments in the Grid-connected Rooftop Solar segment. It was obvious by looking at their moves as well.

Move 1:

Subsidy for all: Commercial & Industrial, Residential, Institutional, Government and Social sector

Quantum: 30%

Move 2:

Subsidy removed for Commercial & Industrial segment

Move 3:

Reduction of subsidy for the Residential segment, Institutional, Government and Social sector

Quantum: 15% (refer)

But then, no matter how much customers hoped for it, the following move was not foreseen.

Surprising Move 4 (Nov 19th, 2015):

30% subsidy for Residential, Institutional, Government and Social sector. A whopping 70% subsidy for the states: Sikkim, Uttarakhand, Himachal Pradesh, J&K, Lakshadweep and Andaman & Nicobar Islands.

To get a detailed view, refer to this notification (In my opinion, it is by far the clearest and most specific notification by them).

This serves as a game changer for the states above! Completely brings financial viability right to the table. Of course, an analysis will follow on by ‘How much’. Watch out for that, this week. But all in all, the move to bring back 30% subsidy (in other states) will play a huge role in uptake of rooftop solar in these segments.

Some of the other benefits encompassed in the document:

• AD for Industrial & Commercial segment (as before)
• Custom Duty Concessions and Excise Duty Exemptions
• 10 year tax holiday (as before)
• Bank loans for solar as part of home loans/ home improvement loan

New clarification:

CFA will be valid for projects ranging from 1 kWp to 500 kWp only (refer to para 1 of the document). So these benefits perhaps cannot be availed by those who have institutional plants of a capacity above 500 kWp. Clarification is needed on that.

Who gives you subsidy?

State nodal agencies, state departments, empanelled government agencies/DISCOMs, SECI, IREDA, PSUs of central and state government depending on the which body the project is under.

So, for those who had been waiting for the prices of solar to fall to spend lesser on buying the solar power system, now is the time to jump. I might have said before the subsidy will not come back and it is back. But, you can definitely mark my words that the subsidy will not increase beyond this. While the subsidy is available, take the leap to install your solar power system. Those in the North- Eastern states should not even think twice. The subsidy won’t last too long.