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Central Finance Assistance for rooftop solar sector to continue
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Speculations were rife last year about the government would be withdrawing subsidy support to rooftop solar for residential consumers from FY 2019-20. Well, the government has settled the dust for now. Central Finance Assistance (CFA) to these projects will continue. GOI has just approved the second phase of funding for the rooftop solar scheme which amounts to INR 11,814 Cr.

Breakdown of the CFA

GOI has set a target to install 40,000 MW rooftop plants by 2022 but it struggling to keep the pace. The current capacity installed is only 2000 MW. The total capacity for this scheme is therefore 38,000 MW.

The scheme has two components: A and B. The component A involves setting up 4,000 MW grid-connected solar rooftop plants in the residential sector with central financial assistance. The total CFA is INR 6,600 Cr.

The second component i.e Component B has incentives to DISCOMs based on achievement for installing additional grid-connected solar rooftop capacity in all sectors over and above the base level, with the incentives being limited to the first additional 18,000 MW of rooftop capacity added. The incentive fixed for the DISCOMs is INR 4,950 Cr.

Capacity building and service charges are INR 66 Cr and INR 198 Cr respectively.

Year wise outlay of the rooftop solar scheme

Here is the year wise plan in order to raise the required funds.

Central Finance Assistance for rooftop solar sector to continue
Source: MNRE, SolarDae Research

The ministry will separately issue the operational guidelines for implementing the scheme.

SolarDae’s Take

The fresh CFA to promote residential rooftop solar actually replicates the old scheme. The total CFA comes to INR 16,500 per KW. It is approximately the same amount that the government had been previously giving out. If at all anything that can be introduced new here is the government’s own proactiveness in the timely release of subsidy to rooftop solar developers.

The incentive component to the DISCOM is somewhat promising. DISCOMs have been not very active in promoting this market on fear of losses to their revenue. The government has long been trying to bring DISCOMs on board in the rooftop market. This is an attempt towards that. But for an overall growth regulatory intervention is absolutely necessary.

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Post Author: Ankur Kumar Jha

Founder SolarDae || MBA Power Management || B.E (Mechanical)

Ankur analyses mainstream media coverage of renewable energy in general and solar in particular; he tracks the ongoing development of regulations and policies and incorporates them in his opinion. He can be reached at +91-8860726731 for any assistance in rooftop solar and utility-scale projects.

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