Even as details are awaited, it is clear that the PM Suryoday Scheme unveiled on January 22 to provide one crore ‘low and middle income’ households with rooftop solar electricity holds out considerable promise. It is not clear whether the scheme is part of the existing rooftop solar subsidy programme which offers a subsidy of just under ₹15,000 for every kWh of capacity installed up to 3 kWh, or intends creating a separate set of ‘small-scale’ incentives. It also remains to be clarified how low- and middle-income households will be identified; nor are deadlines mentioned.

Be that as it may, the scheme’s focus on household rooftop solar must be welcomed. This segment accounts for a capacity of just 2.7 GW, while commercial and industrial establishments have created the bulk of the total rooftop solar capacity of 11 GW. Solar capacity growth has been driven by utility solar (total solar capacity stands at 73 GW), with rooftop not finding takers despite a capital subsidy of about 30 per cent in place. There are several reasons for this. First, discoms do not encourage rooftop solar as they lose revenue in the process — the rooftop feed into the grid is deducted from the bill. Second, at the lower end of household use, precisely the consumers the new scheme rightly targets, rooftop solar does not appear attractive.

Household rooftop solar has been driven by urban affluent users, who are able to effect bill savings of 40 per cent at monthly levels of electricity use that exceed, say, 1,000 units. A household that consumes 1,300 units per capita per annum, roughly the national average, can meet its needs through a 1 kWh panel, which may cost them ₹50,000 even after subsidy. However, the power tariffs at the lower slabs are too low, if not free, for such an investment to seem worthwhile. Rooftop solar finds no takers in States with free power for lower-end consumers. Therefore, to encourage the greening of energy use, free power should be restricted , and the money saved should be used to promote rooftop solar.

There are ways, apart from tariff rationalisation, to improve capacity creation in household rooftop solar. Discoms should shed their resistance to this route. At the lower end, the cost of supplying power exceeds the revenue, if any, and hence the shift to solar would prune losses. What can really work as a gamechanger — and should be woven into the rules of the new scheme — is to aggregate lower end users into a community model. The ‘green open access rules’ announced in 2022 allow for the creation of a 100 kWh community power project, which opens up interesting possibilities. Numerous investors can invest in a 100 kWh capacity, not necessarily located on their rooftop, and offset the power so generated against their use . This would help poorer households benefit from scale economies. In all, household rooftop solar is a good option but it needs more than just capital subsidy to make it work.