Modi’s rooftop solar rollout lags despite subsidy push

Prime Minister Narendra Modi’s push to accelerate the rollout of rooftop solar power ‌is falling short of targets despite heavy subsidies due to loan delays and limited support from ​state utilities, according to vendors and analysts.

The shortfalls represent the latest challenge to the government’s efforts to ⁠nearly double clean energy capacity to 500 gigawatts by 2030, and come as the government plans to suspend clean energy tendering targets amid a mounting backlog of awarded projects yet to be built.

Challenges to plans to increase solar uptake may mean ‌the coutry maintains its reliance on coal-fired power.

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The Ministry for New and Renewable Energy created its subsidy programme for residential solar panel installations in February 2024, covering up to 40% of the costs.

But ‌residential installations at 2.36 million are well below the ministry’s target of 4 million by March, according ‌to ⁠data from the programme’s website.

“Banks’ reluctance to lend and States’ hesitance to promote the schemes could ⁠derail Centre’s efforts to transition away from coal,” said Shreya Jai, the lead energy analyst at research firm Climate Trends in New Delhi.

Roughly three in five rooftop solar applications filed on the scheme’s website are yet to be approved, while about 7% have been rejected, ​according to government data on the programme, known as ‌the PM Surya Ghar.

In a statement to sources about the pending applications, the renewable energy ministry pointed to accelerating installations, which have benefited over 3 million households, and said the scheme enables state-owned utilities to reduce subsidy payouts to keep residential power bills in check. “The loan rejection rate varies across States,” the statement ‌said.

Under the PM Surya Ghar scheme, consumers apply and select a vendor who handles paperwork and arranges bank ​financing for solar panels. After loan approval and installation, the vendor submits proof, after which the government subsidy is credited to the bank.

Bank delays

However, banks have been rejecting or delaying ⁠loans for numerous reasons, including the lack of documentation, which they say is necessary to protect public funds.

“We are working with the government to push for some standard documentation, because it is necessary to avoid bad loans. Currently if loans ‌go bad, banks can take away these panels but what will we do with these panels?” said a senior official at a major government-owned bank.

Chamrulal Mishra, a solar vendor in Odisha, said applications are often rejected because the customer has missed electricity payments or because land records are still in the name of deceased relatives.

However, residents dispute the claims that they have missed payments, which they attribute to administrative errors after a change in utility ownership decades prior.

A spokesperson for the Department of Financial Services, which regulates the country’s ‌banks, said they have responded to consumer feedback to allow co-applicants for loans to clear up title claims and simplify ​documentation requirements.

The Renewable Energy Association of Rajasthan said some banks are making collateral demands for loans under ₹2 lakh despite scheme guidelines not requiring them to, which is constraining solar power ⁠additions.

State Bank of India and Punjab National Bank, some of the country’s largest lenders, did not reply to requests ⁠for comment on the matter.

State-owned utilities are also not promoting rooftop solar as much, as they are concerned about the loss of revenue as sales move off the electric grid.

“Wealthier households typically have ‌high electricity consumption, tariffs and reliable roof access. When they shift from the grid, it leaves a larger financial burden,” said Niteesh Shanbog, an analyst at Rystad Energy.