India’s solar power subsidies for homes face scepticism

Lakshmi Narayan was one of the first to see the light: in 2020 the engineer put solar panels on his roof in India’s Bhopal city, becoming a clean energy pioneer because of his desire to help his country move away from planet-heating fossil fuels.

“I understand the importance of renewable energy and thought that everyone should adopt it,” said Narayan, 60, whose action inspired many others to do the same in the capital of Madhya Pradesh state in central India.

Now, a new government scheme – unveiled before voting began in nationwide elections in April – aims to encourage more people to install solar panels on their roofs as part of India’s commitment to triple renewable capacity by 2030.

The new programme, launched in February, provides 75 billion rupees ($9 billion) in subsidies to install grid-connected rooftop solar systems on around 10 million homes, allowing consumers to reduce their electricity bills when the sun shines and sell extra units to the grid to earn some money.

It is expected to create 30 gigawatts (GW) of solar capacity in homes, leading to a reduction of 720 million tonnes of CO2 equivalent planet-heating emissions over the 25-year lifespan of the rooftop systems.

“I want three things. Every household’s power bill should be zero; we should sell surplus electricity and earn money; and I want to make India self-reliant in the energy sector as we transition to the era of electric vehicles,” Prime Minister Narendra Modi said in a televised interview in late April.

The process, which was previously complicated and fragmented, has been simplified with the creation of a one-stop online portal to smooth applications and facilitate installations. Subsidies are deposited directly into people’s bank accounts.

India overtook Japan to become the third-largest solar power generator in 2023, providing 5.9% of global growth in solar, a report by think tank Ember said on May 8.

But Ember noted that wind, solar and other low-carbon sources are not yet growing fast enough to meet India’s rising electricity demand.

The new rooftop solar programme is meant to boost that growth but Narayan’s experience offers a cautionary tale.

He says the new online portal will provide answers to a lot of the bureaucratic headaches that used to bedevil the process but, in his experience, the bigger challenge is getting the electricity distribution companies, or DISCOMs, on board.

A December 2023 study by the Centre for Science and Environment (CSE), a Delhi-based think tank, said DISCOMs were supposed to provide seamless access and connectivity for rooftop solar systems to the national grid but that this was sometimes “in direct conflict with business interests of the companies”.

Narayan said that although he saved up to 250,000 rupees ($2,996) in electricity bills over three years thanks to his 6 kilowatt (KW) solar system, selling excess electricity to the grid proved to be problematic with debt-ridden DISCOMs proving ineffective partners.

“The electricity distribution company charges me 8 rupees for each unit that I consume from the grid, but for the surplus solar electricity that I sell back to the grid, they pay me 1.5 rupees per unit. How is that fair?”

And he said that the distribution company added a fixed charge of 500 rupees to his monthly bill after he installed the panels.

“They said that this is the minimum amount we will charge you even if your bill is zero,” he said, adding that he got no answer when he enquired about the reason for the new tariff.—Reuters