Syllabus: GS3/Environment
Context
- Recently, the World Bank has approved a financing package of USD 890 million to support India’s national rooftop solar programme under the PM Surya Ghar: Muft Bijli Yojana.
Rooftop Solar Programme in India
- PM Surya Ghar: Muft Bijli Yojana (2024): It aims at making rooftop solar accessible to households while promoting clean energy and energy security.
- Key Features are Central Financial Assistance (CFA) for residential consumers; collateral-free financing through banks; national online portal for registration and subsidy; vendor empanelment and quality assurance; net metering support; and capacity building for DISCOMs and financial institutions.
- It aims to:
- Install rooftop solar in 1 crore (10 million) households.
- Reduce household electricity bills.
- Boost domestic manufacturing – Make in India
- Promote decentralised renewable energy generation.
Why is World Bank Support Important?
- Support & Accelerate India’s Clean Energy Transition: The financing supports India’s transition to decentralised renewable energy by scaling residential rooftop solar.
- Supports Climate Commitments: It aids India’s goals of Net Zero emissions by 2070; and 60% non-fossil electricity generation by 2035.
- Unlocks Private Investment: It reduces reliance on public funds and expands access to affordable credit by leveraging $4.2 billion in private financing.
- Reduces Financial Barriers: Collateral-free loans and improved financing mechanisms make rooftop solar accessible to middle and lower-income households.
- Strengthens Institutions: The programme builds capacity DISCOMs, banks, vendors and installation agencies.
- This improves service delivery and consumer confidence.
- Job Creation: The initiative is projected to generate 1.7 million jobs, especially in the manufacturing, installation, maintenance and allied services sectors.
- Builds upon Long-Term Partnership: The World Bank has been supporting India’s rooftop solar sector for over a decade:
- 2016: $648 million for the Grid-Connected Rooftop Solar Programme (main consumers are commercial and industrial)
- 2022: $165 million more to enter the residential market.
- With the help of the cumulative support, the installed rooftop solar capacity has increased from about 500 MW to over 27 GW.
Challenges of Rooftop Solar Sector in India
- High upfront installation costs (even with subsidies).
- State-to-state net metering policies are inconsistent.
- Financial stress and capacity constraints of DISCOMs.
- Grid integration and distribution infrastructure issues as rooftop capacity increases.
- Low awareness among consumers in many markets.
- Shortage of skilled technicians in some areas
- Quality control issues for equipment and installation.
- Lack of affordable credit for low-income households.
Way Forward: Fully Exploiting PM Surya Ghar
- Release of subsidy through digital platform in time.
- Provide cheap and collateral-free credit.
- Standardise net metering regulations across states.
- Strengthen DISCOM financial and technical capacity.
- Promote local manufacturing of solar modules, inverters and storage systems under Production Linked Incentive (PLI) scheme.
- Invest in skill development of installation and maintenance personnel.
- Increase awareness campaigns to improve participation from households.
- Combine rooftop solar with battery storage and smart grids for greater reliability.
- Promote increased private sector participation through innovative financing and risk-sharing mechanisms.
