The Ministry of New and Renewable Energy (MNRE) has issued operational guidelines to implement the second phase of its grid-connected rooftop solar photovoltaic (PV) program. Overall, 22 GW of rooftop solar PV projects is to be set up under the second phase of this program.

The target of the program is to install 38 GW of rooftop solar by 2022, of which 4 GW will be in the residential sector and 34 GW under other sectors such as governments, commercial, industrial, and educational.  The program also aims to promote domestic manufacturing of solar cells and modules.

There are two main components in the program:

Under Component A, up to 4,000 MW of grid-connected rooftop solar projects in the residential sector will be set up with Central Financial Assistance (CFA) for which DISCOMs and its local offices will be the nodal points for the implementation of the program.

A CFA of up to 40% will be given for rooftop solar PV systems up to 3 kW capacity. For rooftop solar PV systems of capacity above 3 kW and up to 10 kW, a CFA of 40% will be applicable only for the first 3 kW capacity and for capacity above 3 kW, the CFA will be limited to 20%.

For group housing societies and residential welfare associations under component A, the CFA will be limited to 20% for the installation of the rooftop solar PV project for the supply of power to common facilities. The capacity eligible for the CFA will be limited to 10 kW per house with the total not more than 500 kW, inclusive of rooftop solar PV project already installed on the individual houses.

The MNRE will allocate the capacity for the installation of rooftop solar PV systems in the sector by DISCOMs in the ensuing year. One of the parameters for allocating the capacity will be the demand raised by the DISCOM and the capacity required for the fulfilment of solar renewable purchase obligations (RPO) of the state. DISCOMs will be required to submit their yearly online proposal on the MNRE’s SPIN portal by the month of March.

The government-owned DISCOMs will be eligible to avail an advance CFA of up to 30% of the total CFA amount for the project. For private DISCOMs, the CFA will be disbursed on a reimbursement basis. However, if required, private DISCOMS will be eligible to avail an advance CFA upon the submission of a bank guarantee of an equivalent amount.

Under Component B, incentives to electricity distribution companies (DISCOMs) based on their achievement towards the initial 18,000 MW of grid-connected rooftop solar PV projects will be provided. Incentives will be provided for each MW capacity of solar rooftop, added by DISCOMs in their distribution area over and above 10% of base capacity installed at the end of the previous year.

DISCOMs have to submit the cumulative capacity of grid-connected rooftop solar PV projects (in MW) installed in their distribution area as on March 31, 2019. This will be taken as the installed base capacity for the first year of participating DISCOMs. For achievement above 10% and up to 15% over the installed base capacity, the DISCOM will get an incentive of 5% of the applicable cost for the capacity achieved above 10% of the installed base capacity. For an achievement beyond 15% over the installed base capacity, the DISCOM will get 5% of the applicable cost for the capacity achieved plus 10% of the applicable cost for capacity achieved beyond 15% of the installed base capacity.

In March 2019, President of India had approved the launch of the second phase of grid-connected rooftop solar PV program in India. The program aimed to achieve the target of 40 GW of rooftop solar PV capacity by 2022. Under phase-II, 38 GW of grid-connected rooftop solar PV capacity was expected to be installed. The central government had to provide ₹118.14 billion (~$1.66 billion) as central financial assistance (CFA) for capacity building, service charges, and incentives to distribution companies (DISCOMs).