States opt for one-time solar grants to cut recurring power subsidy bills

In a bid to reduce the financial burden of subsidising electricity, several states, including Uttar Pradesh, Andhra Pradesh and Bihar, are now offering financial assistance to households for installing rooftop solar systems. The move comes as an alternative to continuing with recurring free-power schemes, according to J.V.N. Subramanyam, Joint Secretary at the Union New and Renewable Energy Ministry.

Speaking to The Hindu, Mr. Subramanyam explained that the approach, known as the Utility-Led Aggregation (ULA) model, involves states converting their ongoing subsidy payments into a one-time capital expenditure for rooftop solar installations. This allows states to avoid the recurring costs of providing free daytime electricity while still supporting households that cannot afford the upfront investment.

The central government's ₹75,000 crore Pradhan Mantri – Surya Ghar: Muft Bijli Yojna aims to install rooftop solar (RTS) in one crore households by March 2027. The scheme offers subsidised installations, bank loans, and simplified procedures to encourage adoption. Households that install RTS receive up to 300 units of free power per month. However, many households already receiving free power under state schemes had little incentive to switch, prompting states to rethink their subsidies.

As of August 13 this year, approximately 52 lakh households have installed RTS under the Surya Ghar scheme. Mr. Subramanyam noted that about 2 lakh installations have been completed under the ULA component, which targets 30 lakh installations in the ongoing phase. He added that installations have picked up in the last three to four months, with growing interest from states such as Bihar, Jammu and Kashmir, and Rajasthan.

A June survey by the Council on Energy, Environment and Water (CEEW) highlighted the need to sustain momentum to achieve the 10 million target by March 2027. The report said India must solarise around 0.6 million households per month between June 2026 and March 2027. It also stressed diversifying adoption beyond the five states—Gujarat, Maharashtra, Rajasthan, Uttar Pradesh and Kerala—which account for over 71% of national installed capacity.

The CEEW survey found that 73% of households that perceive RTS as expensive are unaware of available financing options. Among those willing to consider the model, households with low electricity consumption were the most reluctant to contribute to upfront costs. The report suggested that addressing affordability barriers through suitable financing could unlock a potential demand of 22.7 GW of rooftop solar capacity.