What Is The Subsidy For Solar Panels In Mp?

India is one of the world’s fastest growing energy markets and has set ambitious solar energy targets to help meet its rising energy demands in a sustainable manner. The Indian government has aimed to install 100GW of solar power capacity by 2022 as part of its commitment under the Paris Agreement on climate change.

The state of Madhya Pradesh is blessed with high solar insolation and vast tracts of unused land ideal for large-scale solar projects. MP is already one of the leading states in terms of installed solar capacity. As of August 2022, MP had the 5th highest installed solar energy capacity in India at 2.8 GW, behind Rajasthan, Karnataka, Gujarat and Tamil Nadu.^[1] The state has set an ambitious target of building 10GW of solar capacity by 2022.

To attract investments and enable faster solar capacity addition, both the central and MP state governments provide various subsidies and incentives for solar power projects. These subsidies help improve the financial viability of projects for developers. They also make solar power more cost-competitive compared to fossil fuel based power. Subsidies play an important role in accelerating India and MP’s transition towards clean energy and meeting their climate goals.

Table of Contents

Central Government Solar Subsidies

The central government provides various subsidies and incentives to promote solar energy adoption across India. Some of the major central government schemes are:

Solar Park Schemes: The Ministry of New and Renewable Energy (MNRE) provides central financial assistance of up to Rs. 25 lakh per megawatt to set up solar parks across states. These parks allow concentrated areas of solar power generation. They receive subsidies for development costs like land acquisition, power evacuation infrastructure, and site levelling (Source).

Solar Rooftop Schemes: Under the MNRE rooftop solar scheme, residential, institutional and social sector customers can receive up to 40% subsidy on the benchmark cost of rooftop solar systems. Commercial and industrial sector customers can receive up to 20% subsidy. This promotes distributed solar power generation (Source).

MNRE Capital Subsidies: The MNRE provides up to 30% capital subsidy for solar projects by government entities like municipalities, panchayats and cantonment boards. Capital subsidies of up to 90% are provided for solar projects in special category states. This assists adoption of solar power by government institutions (Source).

MP State Solar Policy

Madhya Pradesh was one of the first states in India to introduce a comprehensive solar policy aimed at promoting solar energy deployment. The New and Renewable Energy Policy was introduced in 2012 and has gone through several iterations since then. The latest version is the Solar Energy Promotion Policy – 2021.

The state policy focuses on incentivizing rooftop solar systems, solar pumps for irrigation, and utility-scale solar power plants. Key features and provisions include:

Net Metering

The policy mandates DISCOMs in MP to allow net metering for rooftop solar systems up to 2 MW capacity. Consumers can install a rooftop system sized up to 90% of their sanctioned load and get credited for surplus solar power exported to the grid. This enables self-consumption and reduces reliance on grid power.

Open Access

The policy allows open access to renewable energy projects above 1 MW capacity. This enables direct power purchase from solar power generators instead of through the DISCOM. Wheeling and banking charges are also waived for solar open access consumers. This facilitates direct corporate solar procurement.

The state policy aims to streamline regulations and drive rapid solar adoption by households, businesses and industrial consumers. However, rooftop solar uptake remains slow due to lack of consumer awareness.

MP Solar Subsidy for Rooftop Systems

The Madhya Pradesh government provides a subsidy for setting up rooftop solar systems under the Rooftop Solar Programme Phase II scheme introduced by the Ministry of New & Renewable Energy (MNRE). The subsidy rates per kW installed capacity are as follows:

40% subsidy for 1 kW systems (up to 3 kW)
20% subsidy for >3 kW and up to 10 kW systems

20% subsidy for >10 kW and up to 100 kW systems

The subsidy amount is capped at Rs. 20,000 per kW. For example, for a 1 kW system costing Rs. 50,000, the subsidy would be 40% of 50,000 i.e. Rs. 20,000.

To be eligible for the subsidy, applicants must be residential, institutional or social sector consumers of the MP discoms. Commercial and industrial establishments are not eligible. The rooftop solar system must be grid-connected and installed by an empaneled vendor.

Interested consumers can apply on the National Portal for Rooftop Solar along with required documents like electricity bill, roof ownership proof etc. The application is scrutinized by the discom and approved projects can avail the subsidy after successful installation and commissioning.

MP Solar Subsidy for Solar Pumps

The Government of Madhya Pradesh offers subsidies to farmers and agricultural consumers to install solar pumps under the Chief Minister Solar Agriculture Pump Scheme. The scheme aims to promote solar energy adoption in the agriculture sector and reduce the burden of electricity bills for farmers.

The subsidy amount varies based on the pump capacity:
– For 1 HP to 5 HP pumps: 50% subsidy or Rs 1 lakh, whichever is lower
– For 5 HP to 10 HP pumps: 50% subsidy or Rs 1.3 lakhs, whichever is lower
– Above 10 HP: 50% subsidy or Rs 1.5 lakhs, whichever is lower

To be eligible, the applicant must be a farmer with a valid agricultural power connection. They can apply online on the Unified Mobile Application for New Age Governance (UMANG) portal or visit the DISCOM office. The required documents include Aadhaar card, land ownership papers, electric bill copy etc.

Once the application is approved, the subsidy amount is directly transferred to the farmer’s account within 15 days. The farmer can then install the solar pump through an empaneled vendor. MP government aims to install 1 lakh solar pumps across the state under this scheme.

MP Subsidy for Off-Grid Solar Systems

The state of Madhya Pradesh provides subsidies for off-grid or decentralized solar systems under the Decentralized Renewable Energy (DRE) scheme. This is aimed at providing electricity access to remote and rural areas that lack grid connectivity.

Under this scheme, the Madhya Pradesh Renewable Energy Department provides a subsidy of up to 90% of the project cost for off-grid solar systems. The key beneficiaries include:

Remote villages – Solar home lighting systems, solar street lights, solar drinking water pumps etc.
Schools – Solar study lamps, solar mini grids etc.

Commercial establishments in rural areas – Solar pumps for irrigation, solar cold storage systems etc.

The high subsidies under the DRE scheme have enabled the installation of over 30,000 off-grid solar systems in Madhya Pradesh, providing clean electricity access to thousands of rural households and institutions.

Sources: https://www.centaurpower.in/solar-panel-subsidy-in-madhya-pradesh/

Subsidies for Solar Manufacturing in MP

The government of Madhya Pradesh offers various incentives to promote solar manufacturing in the state. Some of the key initiatives are:

Solar Parks – The state has established several solar parks such as Rewa Ultra Mega Solar Park, Agar Solar Park, Neemuch Solar Park etc. These parks provide plug and play infrastructure, facilitation services and fiscal incentives for solar manufacturers.¹

Special Economic Zones – MP has designated several SEZs focused on solar equipment manufacturing like the Indore Special Economic Zone and the Jabalpur Solar Equipment Manufacturing SEZ. Companies setting up manufacturing in these zones get benefits like exemption from customs/excise duties, income tax breaks etc.¹

Capital Subsidy – The state provides a capital subsidy of 30% on investment in plant and machinery for solar manufacturing units. An additional 5% subsidy is provided for units set up in backward districts of the state.²

Interest Subsidy – A 5% interest subsidy is given on term loans taken by solar manufacturers for setting up operations in MP. The state also reimburses VAT and entry tax paid by manufacturers.²

Subsidies from DISCOMs

Madhya Pradesh’s electricity distribution companies (DISCOMs) offer various incentives to encourage the adoption of rooftop solar systems in the state. The key incentives are:

Net Metering

Net metering allows rooftop solar consumers to export excess solar power generated during the day to the grid. This exported energy is deducted from the electricity consumed from the grid at night. Net metering ensures consumers get the full value of the solar power generated, offsetting their electricity bills.[1]

In Madhya Pradesh, net metering is available for systems up to 500 kW capacity. Consumers only pay for their net electricity consumption from the grid after subtracting solar export credits.

Renewable Energy Certificates

DISCOMs in MP offer renewable energy certificates (RECs) to rooftop solar producers for the green attributes of the solar power generated. 1 REC is issued for 1 MWh of solar power produced. RECs can be sold on energy exchanges to earn extra income beyond electricity savings.[2]

Overall, net metering and REC incentives from DISCOMs in Madhya Pradesh enhance the savings and ROI of rooftop solar systems for consumers.

[1] https://homescape.solar/blog/solar-panel-system-subsidy-in-madhya-pradesh/

[2] https://www.loomsolar.com/blogs/subsidy/solar-panel-subsidy-in-madhya-pradesh

Challenges and Criticisms

Despite good intentions, Madhya Pradesh’s solar subsidy programs have faced some challenges and criticisms:

There have been gaps in implementation and utilization of the subsidies. For example, as per this analysis, only around 30 MW of rooftop solar has been installed under net metering policy against a target of 500 MW. Reasons include lack of consumer awareness, complex application process, delays in approval and release of subsidy by government agencies.

Experts have suggested improving the subsidy disbursement mechanisms, increasing targets and budgets, investing more in raising consumer awareness through marketing campaigns, streamlining bureaucratic processes, and better coordination between various government departments and agencies to improve uptake of the subsidies.

There have also been some concerns about quality of installed solar systems, especially smaller rooftop systems. Strict quality control and monitoring of installations done under subsidy programs has been suggested.

Some criticism has also been directed at the focus on large solar parks, which critics argue takes agricultural land away from farmers. They suggest greater emphasis on rooftop and off-grid solar for irrigation and rural electrification.

Overall, while the subsidies are a step in the right direction, focused efforts on ground implementation, process efficiency, quality control and consumer awareness can help bridge the gap between targets and actual adoption.

Outlook

Madhya Pradesh has set ambitious goals for solar energy development by 2030. The state aims to add 20 GW of renewable energy capacity, with a major focus on solar power [1]. This goal is part of the state’s larger aim to distribute renewable power to other states in India as well [2].

Achieving these ambitious solar targets will require major investments in solar power infrastructure across the state. Solar subsidies will play a key role in supporting the financial viability of new solar projects and attracting developers and investors. The state and central government subsidies for rooftop solar, solar pumps, and manufacturing will help offset costs and drive adoption. As Madhya Pradesh continues ramping up its solar goals over the next decade, ongoing subsidies will remain an important policy tool for realizing the state’s renewable energy vision.