The Indian cabinet, chaired by Prime Minister Narendra Modi, has approved PM-Surya Ghar: Muft Bijli Yojana with a total outlay of about $9 billion to install rooftop solar and provide free electricity every month for 10 million households. The prime minister launched the scheme on Feb. 13.

The program includes CFA for residential rooftop solar. The scheme provides a CFA of 60% of the system costs for 2 kW projects and 40% of the additional system costs for arrays between 2 kW and 3 kW of capacity. The CFA will be capped at 3 kW. At current benchmark prices, this will mean a INR 30,000 subsidy for 1 kW systems, INR 60,000 for 2 kW systems, and INR 78,000 for systems above 3 kW.

Households can apply for subsidies through the national portal and will be able to select suitable vendors to install rooftop solar. The national portal will assist households in their decision-making processes by providing relevant information such as appropriate system sizes, benefits calculators, and vendor ratings.

Households will be able to access collateral-free, low-interest loan products of around 7% at present for the installation of residential rooftop solar systems up to 3 kW.

Other features of the scheme include:

1. “Model solar villages” will be developed in every district of the country to serve as models for the adoption of rooftop solar in rural areas.
2. Urban local bodies and Panchayati Raj Institutions will also benefit from incentives to promote rooftop solar installations in their areas.
3. The scheme provides a component for payment security for renewable energy service company (RESCO) models, as well as a fund for innovative projects in rooftop solar.

Through this scheme, households will be able to save on their electricity bills while earning additional income through the sale of surplus power to distribution companies.

The proposed scheme will result in addition of 30 GW of solar capacity through rooftop solar in the residential sector over the 25-year lifetime of rooftop systems.