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Solar System Subsidy and Loan Guide

The Solar Revolution in India

Solar energy is currently transforming and changing the way energy is used in India. Through subsidies and finance facilities, solar power empowers homes to avail free electricity. Rooftop solar systems are driving residential consumers towards energy independence. These systems allow users to reduce their power bills by up to 95%, a significant achievement in the Indian context. Advancements in solar technology and increased scale over the past decade have reduced installation costs in India by 90%. Given these lower costs, this is considered the best time to invest in solar energy.

PM Surya Ghar Muft Bijli Yojana (PMSG)

  • Launched in February 2024, this central government scheme aims to install 1 crore rooftop solar systems across India.

  • The initiative allows households to generate 300 units of electricity, effectively freeing them from standard power bills.

  • The scheme supports the transition by subsidizing solar systems and offering accessible bank loans.

  • In a unique financial model, the bank loan EMIs are funded by the savings achieved on electricity bills, making it an incredible offer for 1 crore households.

1. Who needs roof top Solar system in India?

Anyone and everyone who pays power bills of Rs.1500 and more on an average per month requires roof top solar system, since it makes economic Sense.

2. Eligibility criteria under the PM Surya Ghar Subsidy Scheme

A) All individual home owners are eligible to avail the central government subsidy Scheme.

The subsidy is as follows:

  • 1kw capacity – Rs 30,000/-.
  • 2kw capacity – Rs 60,000/-.
  • 3kw and above – Maximum up to Rs 78,000/-.

 

B) To avail the subsidy scheme, only made in India DCR Panels [Domestic content requirement] needs to be used in the solar Power generator.

  • The non DCR panels which are not made in India are not eligible under the subsidy Scheme.
  • Though the DCR Panels are costly by up to Rs 8000 to Rs 10,000/- per kw, still, because of the subsidy availability, it makes economic sense to install the DCR Panels and avail the full subsidy up to 6kw.
  • Above 7 kw, it does not make economic sense to install the DCR Panels.

3. Subsidy Process through the PM Surya Ghar Portal.

The central government has launched a Portal called the PM Surya Ghar Muft Bijli Yojana to give subsidy for the home consumers. The home owners should register under this scheme with the following documents:

  • An Aadhaar card in the name of the consumer.
  • EB bill standing in the same name as above.
  • Pan card.
  • Bank account details, in which the subsidy amount shall be disbursed after the roof top solar system commissioning.

During the process of registration, the consumer will get a OTP which needs to be shared with the vendor so that the consumer receives an in-principle sanction letter from the Ministry of MNRE with the subsidy amount.

4. Selecting the right vendor

In the PM Surya Ghar Portal, the consumer has to select an approved registered vendor like Darling Digital World (Darling Solar) who will help the consumer in the entire process of registration, solar panel installation, commissioning the project, getting the finance from Nationalised banks as well as from NBFC companies like Bajaj Finance Ltd, if required, co-ordinating with the concerned State Electricity board like TNEB for the Net Metering facility and finally facilitating the subsidy transfer from the government.

There are very few reputed and quality vendors like Darling Solar who are experts in all the above systems and processes. The consumers can select a vendor based on the rating of the vendors based on their Scale, No of installations, quality and customer feedback. There are certain vendors who do not have the resources to get the subsidy or facilitate loan arrangements, since it involves lot of paper work and coordination.

As per the central government portal guidelines, all solar installations for which subsidy is availed, the vendors are supposed to give 5 year mandatory maintenance warranty through a signed affidavit which must be uploaded in the National Portal. Any vendor who does not undertake the maintenance properly shall be blacklisted upon complaints received from consumers.

5. Loan facility – the Game changer!

For those customers who cannot purchase the Solar system by paying 100% upfront cash, loan facility is also available through the portal itself from all Nationalised banks as well as private banks, through a process called The Jan Samarth Portal. Banks are offering loans as per the following parameters:

  • For solar generators of up to 3 kw costing Rs 2 lakhs, the rate of interest is 6.5%. Total loan tenure up to 10 years. Initial downpayment from the customer is only 10% as margin money.
  • For solar systems above 3 kw, the banks charge around 10% as interest, with 20% as margin money down payment.
  • The subsidy amount will be disbursed only to the loan account of the customer from where he has availed the loan.

Darling Solar also arranges loans from Bajaj Finance Ltd, a well-known NBFC, for a period of 5 years for customers who are not willing to avail bank loans.

As such typically the loan customer pays for a 3 kw solar system in Darling Solar only Rs. 21,000/- as margin money approximately. The balance is arranged through bank loan and when the customer receives the subsidy amount which gets adjusted in the loan amount, the net loan amount is hardly 1,11,000/-. The EMI for the same for 10 year period comes to around Rs 1,260/- approximately.

The power bill savings after solar commissioning from a 3 kw solar system is around Rs 2,800/- on an average. As such, in the loan scheme, the EMI is literally funded from the EB bill savings and the customers get a net benefit of around Rs 1,500 to Rs 1,600/- as net net savings. Hence, even after paying the EMI through the loan scheme, your electricity becomes free except for a nominal network charge which is approximately 5 to 10% of the customer’s earlier EB bills. Thus, electricity is free literally on an investment of roughly Rs 21,000/- for a home owner except for the network charges.

6. Net metering Facility.

For all home solar installations, done with both DCR and non DCR panels, which are grid-connected, a bi-directional net meter is a must. This will be installed by the local utility, in Tamil Nadu’s case for example, it is the TNEB.

The net meter keeps track of the power which we export to the grid in the day time as well as the power which we import from the grid during the night time (non-solar hours). This way, we only pay if there is use of power over and above the power generation through our solar system.

In Tamil Nadu, for solar installations above 10kw, CEIG Safety certificate is required to be obtained along with building stability reports. For all home solar installations, we need to adhere to the MNRE and State Power utility norms in all components like Solar Panels, Inverters etc.

  • Brands generally give 12 year warranty on manufacturing defects of solar panels.
  • Brands give up to 30 year Performance warranty on solar panels.
  • For inverters, the typical warranty is from 8 to 10 years in India.
  • These warranties ensure peace of mind and long term return on investment for all home solar installations which are done by Darling Solar.

7. The Smart Investment Option!

In the Indian context, 1 kW of solar system generates on an average of 4.5 units of electricity per day throughout the year. Even at a very modest tariff rate of Rs 6.5 per unit, a 3 kW solar system generates around 400 units of power per month, leading to a saving of Rs 2,500 to Rs 4,000 based on various tariff slabs.

Thus, the customer can take back the investment on the solar system from 3 to 4 years based on tariff rates. After the payback period, the customer enjoys free electricity for a further period of 20–25 years.

But then, selecting the right quality vendor like Darling Solar matters much because of the maintenance and quality of components, after-sales service, finance options, etc. Partnering with Darling Solar, the fastest-growing home solar vendor in Tamil Nadu, will give the consumers 100% peace of mind through the PM Surya Ghar Scheme!