Pradhan Mantri Surya Ghar Muft Bijli Yojana- Key Challenges

Source– This post on Pradhan Mantri Surya Ghar Muft Bijli Yojana- Key Challenges has been created based on the article “Power on the rooftops” published in “Business Standard” on 4^th March 2024.

UPSC Syllabus Topic– GS Paper 2- Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

News– The Union cabinet recently approved the Pradhan Mantri Surya Ghar Muft Bijli Yojana with a budget of 75,021 crores. This scheme could transform electricity access and the country’s climate goals. This article explores the challenges that may affect its implementation. Pradhan Mantri Surya Ghar Muft Bijli Yojana

 What is Pradhan Mantri Surya Ghar Muft Bijli Yojana?

1. Objective: To deliver 300 units of ‘free electricity’ monthly to 1 crore households via rooftop solar setups.
2. Department: Ministry of New & Renewable Energy
3. Central subsidy:
   a. 60% of installation costs for 2 kW systems
   b. 40% of costs for systems ranging from 2-3 kW capacity
   Note- Systems with higher wattage are ineligible.
   c. At present rates, there will be a subsidy of Rs 30,000 for 1 kW systems, Rs 60,000 for 2 kW systems, and Rs 78,000 for 3 kW systems or higher.
4. National Portal – It will facilitate subsidy applications and assist in finding a suitable vendor for installing rooftop solar. Additionally, it will aid decision-making by providing relevant information as needed.

What are the Challenges in its implementation?

1. Free electricity issue– The success of this program relies heavily on the adoption by people. However, the provision of free electricity by many states has deterred people from adopting rooftop solar systems.
2. Financial Constraints for DISCOMs:
   a. In the Surya Ghar program, free electricity is provided with the assumption that rooftop solar units will be connected to the grid. The grid will buy back excess power from households via the net metering system.
   b. Many discoms foresee losses from the net metering system as they already incur fixed costs and pay contracted charges to power generators under long-term Power Purchase Agreements (PPAs).
   c. Discoms fear that compensating consumers for absorbing power from their rooftop solar plants will increase their costs, especially since it needs to be absorbed during daylight hours when tariffs are typically higher.
3. Limited success of previous schemes– Due to the above issues faced by discoms, the rooftop solar program, operating since December 2015, fell short of expectations. It achieved only 11.08 GW by December 2023, compared to the 40 GW target. Commercial and industrial consumers contributed about 80% of this capacity, while just over 600,000 households adopted rooftop solar.

Therefore, if the government fails to tackle the structural issues of supply and pricing faced by discoms, achieving the target of 1 crore households may prove challenging.

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Question for Practice:

Define the Pradhan Mantri Surya Ghar Muft Bijli Yojana, its objective and central subsidy provisions. Also analyze the challenges in its implementation.