Addition of 2 more payment methods for Rooftop Solar Installation

The Indian Ministry of New and Renewable Energy Ministry of India has announced new guidelines in terms of payment methods for installation of solar panels on rooftop projects. The new guidelines approve two more payment methods. These guidelines are approved in context of PM Surya Ghar: Muft Bijli Yojana

PM Surya Ghar: Muft Bijli Yojana
On 19th February, 2024, the scheme was approved in the Union Cabinet. The goal of the scheme was to install solar panels on rooftops in one crore households all over India and provide about 300 units of free electricity per month. Its aim is to protect the environment by reducing 720 million tonnes of CO2 emissions in the next 25 years. Its objective is to add around 30 GW of solar capacity throughout India.

New Guidelines
To guarantee payment security in the transaction process, two more payment methods were added. It is also to ensure that the subsidy is granted to the households opting for payments through Utility-led aggregation (ULA) models and Renewable Energy Service Company.

The renewable ministry’s guidelines under the PM-Surya Ghar: Muft Bijli Yojana is to implement components such as Central Financial Assistance and Payment Security Mechanism. These components are going to be implemented to ensure smooth function of RESCO models or the utility-led aggregation models. Its purpose is to ensure that benefits from subsidies are reaching individuals. It also undertakes the responsibility of the safe installation process of solar panels.

At present, around 100 crore are reserved for the payment security mechanism purpose. It is to ensure that investments in the RESCO-model will be safe and more secure. Apart from Rs. 100 crore of funds, more funds and grants will be approved for the investment in the RESCO model in the future to support investment in this model.

About the RESCO and ULA model
The RESCO model refers to third party firms making investments in the installation of rooftop solar systems. In this model, consumers of electricity usage have to only pay for the electricity consumed by his household and not have to pay for other charges associated with the installments. The consumer pays charges to the RESCO which is lower compared to conventional electricity charges.

The ULA model refers to the power utility firms or state designated firms who install rooftop solar systems in place of individual households.

Purpose
Both ULA and RESCO models give households an opportunity to install solar systems with no cost. Its primary aim is to provide homeowners access to clean electricity as well as make it affordable for them. It also aims to achieve broader elimination of financial barriers.

The renewable ministry further cleared that these new guidelines are the supplement to the existing model. The consumer can use the existing method known as capex mode for installation of rooftop solar systems. The consumers can use the existing method by visiting the national portal for applying and managing installment of rooftop solar systems.

These two additional payment models will work alongside the existing method to give more options for the consumers in terms of affordability as well as security.

The image added is for representation purposes only