MNRE: Subsidy Reduction and Home Loan Initiative for Rooftop Solar

The Ministry of New and Renewable Energy (MNRE) has set a target of 40,000 MWp of Grid Interactive Solar Rooftop systems during the next 5 years. However, it has proposed to reduce the capital subsidy for Solar PV for Rooftop systems from 30% to 15%, citing reduced cost of Solar PV panels and a competitive tariff of Rs. 7 per unit that can be achieved without subsidy. This is applicable for Systems ranging between 1 KWp to 500 KWp. The ministry has asked project developers to go ahead with their projects without waiting for subsidy allocation via Aadhaar Linked Account or interest subvention.

As per the current Home Loan and Home Improvement Loan schemes, Solar PV is not covered among items against which loan can be availed. The Ministry of Finance has issued following advisory to all Public Sector Banks:

“All banks are advised to encourage the home loan/ home improvement loan seekers to install rooftop solar PVs and include the cost of such equipment in their home loan proposals just like non solar lighting, wiring and other such fittings”

This will reduce the dependence on private investors who are little hesitant towards investing in Solar projects, and will enable owners to plan their Home loan with inclusion of capital cost for installing Solar Rooftop, based on the available space and requirement.

This is mainly aimed at encouraging residential, commercial, industrial and institutional setups to adopt viable Grid Interactive Solar Rooftop Systems for their own consumption, and inject surplus electricity into the grid. Solar Rooftop Regulation/Policies/Schemes in states like Delhi, Rajasthan, Haryana, UP, Uttarakhand, Kerala and Karnataka will further attract investors and residential consumers towards Solar Rooftop Power.

The Draft proposed for reduction in subsidy can be read here.

The press release of the inclusion of Solar Rooftop capital cost in Home Loan, can be accessed here.