MNRE capital subsidy scheme for off grid solar system

The Ministry of New and Renewable Energy (MNRE) is the nodal Ministry of the Government of India for all matters relating to new and renewable energy. The Government of India launched the Jawaharlal Nehru National Solar Mission (JNNSM) on 11^th January, 2010 with a target to install solar power generation capacity of 20 GW by 2022. MNRE administers JNNSM.  This target is expected to be achieved through large-scale grid connected solar power projects and off-grid solar power projects.

To promote off grid solar power applications, the mission has put forward a target of reaching 200 MW by 2012-13, 1000 MW by 2017 and 2000 MW by 2022.  The detailed targets for solar installations are given in the table below;

JNNSM has created a policy environment for solar technology to make its foray into the Indian market from its inception and both centralized and decentralized technologies are coming up with considerable number of projects. As of 31^st May 2013, total 125 MW of installed capacity of off-grid solar projects was recorded in the country (MNRE).

The mission encourages off grid solar system with the focus is on decentralized systems and hybrid systems to meet supplement lighting and other energy requirements. MNRE is providing financial help to the off grid solar projects through its capital subsidy scheme.

MNRE capital subsidy scheme

The scheme provides partial subsidy and interest bearing loan to the project developer. Various off-grid solar PV systems up to a maximum capacity of 100 kWp (Kilowatt peak) per site are eligible for being covered under the scheme. The entire funding under this scheme is based on project basis. A detailed project report including client details, technical & financial details, O&M and monitoring arrangements has to be submitted to the ministry.

Under the project financial criteria, it has to be funded through a mix of debt and incentives where the promoters’ equity contribution would be at least 20%. If the project promoter follow all these applicability conditions, MNRE would provide financial support through a combination of 30 % subsidy and/or 5% interest bearing loans to the eligible project.

By March 2013, the benchmark price for photovoltaic systems with battery back-up support was Rs.200/- per Wp and Rs. 130/- per Wp for without storage battery. For this financial year i.e. 2013-14, the benchmark price for PV systems with battery back-up support was Rs.170/- per Wp and Rs. 90/- per Wp for without storage battery. These rates are for off grid solar power plant of total installed capacity from 10 KWp -100 KWp

The table below provides the revised bench mark costs applicable for year 2013-14;

*with DC motor. In case AC motor is used there will be a reduction of 15% in the benchmark cost

**with DC motor. In case AC motor is used there will be a reduction of 15% in the benchmark cost

Read more on MNRE website

Capital subsidy of 90% of the benchmark cost is available for special category states i.e. North East, Sikkim, J&K, Himachal Pradesh and Uttarakhand. In addition, capital subsidy up to 60% of benchmark price is exclusively available for standalone rural solar power plants with both technologies i.e. solar PV and solar thermal in remote and difficult areas such as Lakshadweep, Andaman & Nicobar Islands, and districts on India’s international borders.

The release of funds under MNRE capital subsidy scheme is upfront i.e. with installments of 70% on sanction and 30% on completion. It means that the project developer can start construction of the project only after the receipt of capital subsidy and necessary approval from MNRE and the state nodal agency.

The capital subsidy scheme can only be availed by the project developer if the solar equipments that will be used in the project are sourced from MNRE accredited channel partners. These channel partners including solar equipment manufacturers and service providers have been accredited by MNRE through transparent methodology. Click here to view the list of MNRE accredited channel partners.

Reference and further reading – MNRE official website

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