The Ministry of New and Renewable Energy (MNRE) has issued the operational guidelines to implement the PM Surya Ghar: Muft Bijli Yojana for the component ‘Incentive to Power Distribution Companies (DISCOMs).

The incentives worth ₹49.5 billion (~$591.69 million) provide resources to DISCOMs for participating in information, education and communication,  and branding activities, creating conducive regulatory and administrative mechanisms to ensure timely approvals (feasibility, commissioning, inspection, grievance redressal, etc.), achieving implementation targets, ensuring timely availability of net meters, saturating rooftop solar on government buildings, utilizing incentives for rooftop solar-specific activities, and incentivizing field-level staff through recognition and rewards.

These measures will be undertaken by State DISCOMs or other agencies for rooftop solar deployment.

Claims under Phase-II Of The Grid Connected Rooftop Solar Program (GCRT Phase II) Component B for incentives up to FY 2022-23 will be guided by the GCRT Phase II guidelines.

Claims under PM Surya Ghar: Muft Bijli Yojana for incentives from FY 2024-25 onwards will follow the current guidelines.

Claims for FY 2023-24 will be calculated using a weighted average of the applicable benchmark costs, weighted by the number of days the benchmark was operational.

Under GCRT Phase II, the national benchmark was ₹36,470 (~$436)/kW until December, then revised to ₹45,000 (~$537)/kW in January.

The benchmark under PM Surya Ghar: Muft Bijli Yojana was set at ₹50,000(~$597)/kW from the program launch on February 13. The baseline date for the calculation is March 31, 2023.

Criteria

Incentives to DISCOMs will be based on the additional grid-connected rooftop solar capacity installed in all sectors beyond the base level per data from the CGRT Phase II program). Incentives are limited to the first additional 18,000 MW of rooftop solar capacity in the country since the start of Phase II.

The incentive is set at 5% of the applicable benchmark cost for capacity achieved above 10%, less than 15% of the installed base capacity, and 10% of the applicable benchmark cost for capacity achieved beyond 15%.

Implementation

Incentives will be calculated based on the incremental rooftop solar capacity installed by DISCOMs in their distribution area from the installed base capacity (as of the end of the previous financial year) within a 12-month timeline (financial year-wise, from April 1, 2024, to March 31, 2025, and so on for the duration of the program).

The incentive pattern is progressive, with higher rates for higher levels of achievement, as detailed below:

• For installed capacity achieved above 10% and up to 15% over the installed base capacity within a financial year, DISCOMs will receive an incentive of 5% of the applicable cost for the capacity achieved above 10% of the installed base capacity.
• For installed capacity achieved beyond 15% of the installed base capacity within one financial year, DISCOMs will receive an incentive of 5% of the applicable cost for the capacity achieved above 10% of the installed base capacity, plus an additional 10% of the applicable cost for the capacity achieved beyond 15% of the installed base capacity.

Incentives to DISCOMs will be available for the initial 18,000 MW of rooftop solar capacity added in the country after March 31, 2019. If DISCOMs achieve a higher capacity, leading to eligibility for the 10% higher incentive slab, the total incentives will be limited to the financial outlay available under the program, regardless of the total capacity achieved by any particular DISCOM. DISCOMs must upload details of the total rooftop solar capacity added within their jurisdiction on the National Portal to authenticate their claims for the incentive component.

Utilization of Funds

The total incentives to a DISCOM are untied funds, except for the following mandatory provisions:

• DISCOMs must create dedicated rooftop solar teams at their headquarters, circles, and division levels by hiring contractual manpower within the program or including rooftop solar-related services in the duties of outsourcing companies. These teams will handle vendor registration on the National Portal, ERP system upgrades, integration with national portals and dashboards, providing timely services to rooftop solar consumers, inspecting and monitoring rooftop solar plants, managing an online database of commissioned capacity, consumer awareness and publicity, ensuring net-meter availability, providing grid connectivity, and capacity building for officers and staff.
• DISCOMs must allocate 10% of the incentives received (up to ₹10 million (~$119,535)) for a rewards system for DISCOM officials and functionaries. The model rewards system framework in Annex 1 may be modified by the DISCOM as needed. The service charge program component may cover additional expenses if the incentives are insufficient.
• At least 50% of the incentives (up to ₹10 million (~$119,535) per division) must be dedicated to the division and sub-divisional level for administrative expenses, outsourcing services for rooftop solar activities, paying contractual/outsourced manpower primarily for rooftop solar activities, capacity building, organizing consumer-vendor-banker melas, IEC activities, grievance redressal, establishing meter testing benches, and improving the consumer experience for rooftop solar installations and related activities. Funds must not be double-accounted with other central programs like RDSS, IPDS, DDUGJY, or PMDP-2015, and an audited report must accompany the Fund Utilization Report.
• DISCOMs must submit a fund utilization plan adhering to the above clauses when claiming incentives. Expenses incurred after release must be recorded in the Fund Utilization Report with necessary receipts before submitting claims for the next financial year. Failure to submit the fund utilization plan, report, or adhere to these guidelines will result in claim rejection.
• No incentive amount remaining after utilization can be used as part of DISCOM’s balance sheet until all terms and conditions of utilization are met.
• Incentives proposed for specific expenditures above will not be included in the Tariff Determination & Tariff Rationalization process of the respective Electricity Regulatory Commission.

Release of Funds

DISCOMs must raise claims to the Ministry for fund release under this program component each financial year. Claims under GCRT Phase II will follow GCRT Phase II guidelines, while claims under PM Surya Ghar from 2024-25 onwards will follow current guidelines. The Ministry will process these claims and release funds accordingly.

Fund releases from 2025-26 onwards are subject to the submission of the Fund Utilization Report by the DISCOM, ensuring compliance with these guidelines.

DISCOMs will establish a quarterly ranking system for all divisions under its command and identify the top three performing subdivisions. The officials in charge of the subdivision will be awarded with an honorarium.

In June, MNRE issued the operational guidelines to implement the PM Surya Ghar: Muft Bijli Yojana for the component “Central Financial Assistance to residential consumers.”

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.