As more and more people are siding with solar, there’s also a visible surge in the number of people who want to figure out the ins and outs of solar panel subsidy in India. And rightly so!
Investing in a solar system is a big thing for the common man. Solar electricity is free, but the system required to churn electricity from sunlight isn’t. Machinery as important as a solar system surely comes at a price – one that’s worth every single penny.
That being said, although there’s an upfront investment required, it doesn’t imply in any way that a solar system is unaffordable. It’s very much affordable. But since it’s just the beginning of an era of awareness about the goodness of solar, a lot of people misinterpret that the investment is too much.
These are the kinds of blockers that the government has been trying to remove by offering homeowners and housing societies a chance to avail of a solar panel subsidy in India.
This guide is a sincere effort to walk you through the details of a solar subsidy in India: its objectives, types, and more!
If you’ve been planning to install solar at your home, take a plunge! You’ll have all the answers about solar subsidies by the end of this post.
What is Solar Panel Subsidy in India? The 3 Main Objectives
A solar panel subsidy in India is an effort by the government to bring solar into the eye of the masses. In India, a subsidy is currently offered at two levels which we will discuss a little later in this guide.
Let’s first discuss the 3 prime objectives of why a solar panel subsidy in India is offered.
- Mass adoption of solar
- Reducing the electricity bill by replacing fossil fuels with renewable energy sources
- Reducing pollution and global warming
The added financial help that the government offers encourages more and more people to install rooftop solar.
Subsidy Programs in India
For a long time, it was the state-run solar panel subsidy program that was offered. Recently, on the 30th of July 2022, PM Modi launched a nationwide subsidy program. It’s known as the DBT (Direct Benefit Transfer) scheme. Let’s walk you through both types with the help of a comparison table.
| State-wise solar panel subsidy in India | Nationwide solar panel subsidy in India |
| The subsidy is offered against L1 rates and these rates differ in each state. The calculation procedure is, therefore, a little complicated. | There’s one fixed subsidy amount that’s granted. It’s the same for all states across India. Hence, there’s a lot more transparency. |
| The process of subsidy disbursement is cumbersome. It can even take up to 6 months for the discom to disburse the subsidy to the vendor. | It’s a very streamlined process. After the solar system becomes operational, the fund-handling agency disburses the subsidy amount into the bank accounts of customers within 30 days. |
| Only those citizens that have an active subsidy campaign running in their state can apply for a subsidy. | Under the DBT scheme, whether or not your state has an active subsidy program yet, you can apply for a subsidy through the National Portal for Rooftop Solar |
The key takeaways from the comparison between the two subsidy programs that are currently running parallelly in India are as follows.
- DBT solar panel subsidy in India is the better of the two programs: it’s quicker, least complicated, and more transparent.
- It takes just 30 days, after the solar system becomes operational, for the government to directly transfer subsidies into the bank account of the customers.
With the kind of benefits that the DBT scheme offers, it’s expected that soon it will take over the state-wise subsidy completely.
Here’s the rate card citing the subsidy amount offered under the DBT scheme.
| Plant Capacity | Applicable Subsidy |
| Up to 3kW | ₹14588/- per kW |
| Above 3kW and up to 10kW | ₹14588/- per kW for the first 3kW and thereafter, ₹7294/- per kW |
| Above 10kW | ₹94822/- fixed |
Cost of the solar system – the elephant in the room
We’ve walked you through the types and even the objectives of a solar panel subsidy in India. What still hangs in the air is the cost of a solar system. So, we’re holding this elephant by the scruff and spilling out the beans transparently.
The cost of a solar system is not fixed. Many parameters have to be taken into accord. There’s instead a price range and we’ve disclosed it here.
| Solar System Capacity | Cost of the solar system |
| 1 KW | ₹45,000 to ₹70,000 |
| 2 KW | ₹90,000 to ₹1,40,000 |
| 3 KW | ₹1,35,000 to ₹2,10,000 |
| 4 KW | ₹1,80,000 to ₹2,80,000 |
| 5 KW | ₹2,25,000 to ₹3,50,000 |
| 10 KW | ₹4,50,000 to ₹7,00,000 |
Using the DBT rate card we’ve already revealed, you can easily calculate the cost of a solar system now.
Also, the right vendors will always offer financing options such as EMI schemes to make things easier. This amount might look high at the first glance, but:
- It will reduce after you avail of a solar panel subsidy in India.
- It will be worth it once you look at the long-term savings.
Here’s a final nail in the coffin: we’ve made a small savings cheatbook that will give you a clearer picture of the kind of monetary returns you can expect from a solar system.
Savings Cheatbook:
Per se, the cost of electricity/unit in your state is ₹8 and you use approximately 600 units of electricity a month on average. Going by the calculations, your monthly electricity bill would be ₹4,800 approximately.
A 5 KW solar system can generate this same amount of electricity i.e. 600 units.
If you install it at the cost of, say, ₹3,50,000 and get a solar panel subsidy in India of ₹58,352, the final investment you’ll make will be ₹2,91,648.
Once your 5 KW plant will start generating electricity, you will be saving at least ₹57,600/year. This means the amount you invested will break even within 3-5 years (taking into consideration that the cost of electricity increases every year and so would the electricity bill).
Now, the life of the solar system is at least 25 years. And even after that, a tier-1 module will work at an efficiency of at least 70%. If it took 4 years to recover the initial investment, you will still get free electricity for more than 2 decades.
Conclusion:
Now you know everything about solar panel subsidy in India, their objectives, and their types. You also know the cost of solar panels and the kind of savings you will make after installing them.
And with so much information at hand, we hope you’ll now be able to make the right decision without any hesitation – switching to the use of a solar panel system.
