Installing a rooftop solar system may be much more expensive soon both for commercial establishments and residents. Large, commercial establishments that are already paying higher tariff for conventional power may not be entitled to the central government's 30% subsidy any more according to a public notice issued on January 2, 2014 MNRE.
The Ministry of New and Renewable Energy (MNRE)'s current 30% subsidy for rooftop solar projects is under revision. It may be reduced soon to only 15%. The reduced subsidy may be applicable only for certain sectors like educational institutions, residential buildings, old age homes, orphanages, and state and central government buildings. "Due to limited availability of budget", the notice adds that the capital subsidy may not be provided to certain categories of beneficiaries at all.
This is may seem grim for many commercial establishments and residents who were planning to install solar rooftop systems but some energy experts feel it will let the industry grow and come into its own. They feel due to the decline in solar prices over the years, solar projects already make economic sense to consumers (mainly commercial and high-end residential) with high electricity use and high tariffs. "This is a very welcome step from the Ministry and will help move the market to one based on grid parity and pure economic viability rather than one dependent on subsidies. Subsidy if given as a low cost interest loan would certainly be more effective rather than a capital subsidy," said Ashwin Gambhir of Prayas Energy Group.
MNRE in its notice says establishments that are paying high tariff (more than CERC's tariff for solar power) "may not require any subsidy as the rooftop projects would be attractive and viable even without any subsidy." A senior official from MNRE said "this was in the offing for a long time due to crunch in funds. The date as to from when the subsidy will be withheld for commercial establishments is being finalized."
The notice urges state nodal agencies, state departments, commercial establishments and others to set up grid connected rooftop projects without waiting for MNRE subsidies.
"There will be few takers now for solar rooftop projects. I think the government should at least come up with tax incentives for large, commercial establishments which will push them to turn to solar. I don't see the point of giving subsidy to government buildings but not to commercial units with high power tariffs. The price of solar panels is also likely to increase in the coming days because the current government is trying to create a competitive market by attracting investments in panel manufacturing from various countries," said Anand Prabhu Patanjali, renewable energy campaigner, Greenpeace India.
MNRE officials recently announced that PM Modi wants companies from China, Japan, Germany and the United States to lead investments of100 billion dollars over seven years to boost the country's solar energy capacity by 33 times.