In the first five months after the subsidy scheme was announced in October last, the Tamil Nadu Energy Development Agency has received around 1,050 applications from residents desirous of putting up 1kW rooftop solar plants.

This number is seen as good, especially considering that the scheme has not been well publicised.

Grant from govts

The subsidy scheme announced by the Tamil Nadu Government promises ₹20,000 grant for the first 10,000 applicants. This is on top of the (maximum of) ₹30,000 subsidy that the Union Ministry of New and Renewable Energy gives.

Taking the cost of a 1 kW system to be ₹1 lakh, the State Government calculated that a resident will spend ₹50,000 out of his pocket.

It further assumed generation of 1,600 units of electricity from a 1 kW system, which at the maximum domestic tariff of ₹5.75 a unit, works out to ₹9,200 a year.

No risk seen

The annual saving of ₹9,200 upon the capital expenditure of ₹50,000 works out to a return of 18.4 per cent. There are embedded assumptions—maintenance costs, damage of equipment and fall in generation on one side and tariffs going up (resulting in higher saving) on the other.

Getting the subsidy is not seen as a risk, because the approved vendor sells the equipment to the investor net of subsidies—it is up to him to collect the subsidy from the governments.

The Tamil Nadu scheme is open for two years, but it will terminate when the first 10,000 valid applications are received.

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