The Ministry of New and Renewable Energy (MNRE) has issued guidelines for implementing two critical components of the PM Surya Ghar: Muft Bijli Yojana program.

The first component pertains to the central financial assistance (CFA) for residential consumers eligible under the renewable energy service company (RESCO) and utility-led aggregation (ULA) models.

The second component involves the payment security mechanism to cover defaults and delays and ensure timely payments to RESCO developers. The main objective of these guidelines is to establish a robust implementation mechanism to support rooftop solar installations for eligible consumer categories through RESCO and ULA models. This implementation period for this will be until March 31, 2027.

The program also seeks to empower distribution companies (DISCOMs), state governments, and state-designated entities to facilitate the development of rooftop solar projects under the RESCO and ULA models.

RESCO Mode
Under the RESCO model, a third-party developer must finance, install, and maintain the rooftop solar system for at least five years, during which the consumer is not the system’s owner.

Consumers must pay for electricity consumed and may receive compensation for roof usage and may receive the solar system ownership after the project period is completed. Alternatively, RESCO operators can sell excess power to the grid through power purchase agreements (PPAs).

DISCOMs may facilitate tariff collection for RESCO operators and establish mechanisms to support these models.

Utility-Led Aggregation (ULA) Models
ULA models involve utilities or state entities installing rooftop solar systems for households. Assets under these models include:

• Utility-Owned Assets: The utility owns the system during a project period of at least five years, after which ownership may transfer to households. Utilities handle demand aggregation and installation through competitive bidding and can sell generated power under PPAs. Households may receive roof rent or pay an EMI to utilities to repay any debt or liabilities they might have incurred for providing the rooftop service.
• Consumer-Owned Assets: Households own the system from commissioning, with utilities providing grants for installation. Utilities manage installations through engineering, procurement, and construction vendors selected through competitive bidding. Consumers must contribute up to 10% of the benchmark cost (For example ₹5,000 (~$58.5)/kW for a 1 kW system).

Central Financial Assistance

Under the PM Surya Ghar program, CFA is extended exclusively to eligible residential rooftop solar systems, including installations on rooftops, terraces, balconies, and elevated structures, and special systems such as building integrated photovoltaic modules.

Installations linked to approved metering mechanisms, such as group and virtual net metering, are eligible, provided the local DISCOM allows them. CFA is limited to households installing systems of up to 3 kW capacity under ULA proposals.

CFA is not available for non-residential segments or households with pre-existing solar installations. It is calculated based on benchmark rates and excludes additional technologies such as battery storage or trackers from its calculation.

Domestic content requirement (DCR) standards must be met to be eligible for CFA.

Non-metered grid-connected systems, such as behind-the-meter and battery hybrid systems, may qualify if regulatory commissions approve. Off-grid systems do not qualify.

Rules for implementation
All ULA and RESCO installations must report hourly generation data and integrate with the national portal for monitoring and transparency.

Under ULA model, states/union territory (UT) designated agencies must prepare detailed proposals, including the budget, business models, clearances, and funding and these proposals must be approved by the state or UT governments.

A technical committee at MNRE must review, approve or reject the proposal within 30 days, considering aspects including targeting beneficiaries, financial impact, and guidelines adherence.

The technical committee members include representatives from MNRE, the National Program Implementation Agency (NPIA), the Ministry of Power, the Central Electricity Authority, and any other member invited by the Mission Director.

The approved ULA will get login access to create projects and submit consumer details. Consumer consent forms and authentication are mandatory for installation and CFA redemption.

ULA must ensure repair and maintenance services during the project period and original equipment manufacturer (OEM) warranties are transferred to consumers at the end of the project period.

DISCOMs must inspect installations, approve or reject applications, and process CFA upon compliance. Alternatively, the state agency can conduct inspections and verify claims if specified in the proposal.

Under the RESCO model, the NPIA must register RESCO vendors via the national portal after a bank guarantee of ₹2.5 million (~$29,199.88) (waived for government entities) is submitted. The registration will be valid nationwide for over five years post-installation.

Vendors must upload projects on the portal, tag DISCOMs, and submit consumer-authorized applications.

Tariff arrangements must be mutually agreed upon, with clear communication that tariffs include CFA benefits. Consumer consent must be secured through document uploads and OTP-based authentication. Aadhaar-based methods require regulatory approvals.

Vendors must mobilize consumers and upload completion reports for inspections and DISCOMs must inspect and approve installations before CFA disbursal.

Vendors must ensure free repair and maintenance during the project period and OEM warranties must be passed on to the consumers after the projects’ completion.

Authorities may inspect installations; vendors will face penalties or de-registration for non-compliance. DISCOMs must inspect and approve installations or provide corrections or rejections with justification before processing the CFA.

Payment Security Mechanism for Rooftop Solar

A ₹1 billion (~$11.6 million) corpus managed by the NPIA must be established in an interest-bearing bank account. State or UT government proposals using RESCO partners via transparent bidding for tariff discovery can access the payment security mechanism for rooftop solar.

ULA-selected RESCOs must contribute ₹2000 (~$23.39) per installation as a one-time payment security mechanism fee to the corpus.

Bilateral agreements must be entered into by NPIA and states and ensure timely settlement of RESCO dues under the following terms:

State Guarantee: Assurance of payment of dues to RESCO vendors.

Penalty for Delayed Payments:

• Payment of interest which is calculated at the marginal cost of funds lending rate (MCLR) of SBI plus 5% for the first month.
• An incremental increase of 0.5% per additional month, capped at 3% above the base rate.

Billing will be centralized and automated based on generation meters for all installations.

Utilities must settle RESCO claims within 15 days of raising invoices. In case of delay, NPIA must pay RESCOs per agreement terms and recover the amount with interest from the ULA.

The payment security mechanism will cover automated billing-based payments only, excluding other disputes or claims. The corpus can be supplemented through grants or funds with Ministry approval.

A technical committee will oversee the payment security mechanism implementation and suggest modifications as needed.

If the ULA is a DISCOM, Late Payment Surcharge Rules, 2022, will apply to outstanding RESCO dues.

After the program’s completion, the corpus with interest and earnings will revert to the Consolidated Fund of India.

In case of delays in developing necessary IT infrastructure on the National Portal, NPIA can establish interim manual procedures for managing ULA, RESCO, and payment security mechanism-related processes.

MNRE may amend the scheme guidelines or issue clarifications to resolve implementation difficulties.

Residential rooftop solar installations under the PM Surya Ghar: Muft Bijli Yojana reached 616,019 as of November 21, 2024, according to data provided by Minister of State for New and Renewable Energy, Shripad Yesso Naik in the Lok Sabha.

The PM Surya Ghar program was approved on February 29, 2024, to install rooftop solar systems in 10 million households by the end of the financial year 2027.