Karnataka's free power scheme takes the shine off rooftop solar

Bengaluru: The Karnataka government’s guarantee scheme to provide free electricity seems to be acting like a disincentive for the installation of small-scale solar-powered house lighting systems.

According to industry experts, there has been a significant dip in the number of residential solar rooftop installations in the city over the last few months since many households started receiving either a zero bill or a subsidised bill.

Members from the Karnataka Renewable Energy Systems Manufacturers Association (KRESMA) said that many clients had backed out from installing residential solar rooftop systems since the launch of the Gruha Jyothi scheme. One of the vendors said that over a dozen clients dropped the plan in the last four months.

“There were many projects which were in the final stage and many more for which we had held discussions. However, at least 15 clients backed out saying that they received a zero bill and did not want to invest in a solar system now,” said KLH Raya, Vice President, KRESMA. 

Several other vendors said that business has come down by at least 30% in the residential solar systems sector. Deshpal KS, Managing Director, Prolight Systems, pointed out that for many clients, it was not a question of affordability but a feeling of lack of incentive.

“We have seen cases where clients have invested Rs 2 or Rs 3 crore on constructing houses but even such people back out since the general mindset is that the investment will go to waste since there is no incentive,” Deshpal said. 

Raya said that they were trying to convince people that they could earn by supplying the excess power to the grid. However, not many were interested, he said. 

“The usual Return on Investment (ROI) period for projects up to 200 units is six years. However, since they are getting a zero bill, consumers want to wait and decide before they invest. They prefer to wait till the benefits of the scheme are applicable,” he said.

While installation of a solar rooftop for close to 200 units of production could go up to Rs 3 lakh, the consumers can get nearly 40% subsidy on installation charges under the ‘Soura Gruha’ scheme offered by the Ministry of New and Renewable Energy, bringing down the initial investment to approximately Rs 2 lakh. “Since they already have a zero bill, the ROI period will increase. The government should have considered all these and added some conditions before announcing the scheme,” yet another vendor said, speaking to DH on conditions of anonymity. 

According to an estimate by the government, of the 2.16 crore residential connections in the state, nearly 2.14 crore are eligible for the scheme, and this means that the market for solar rooftops will shrink, experts said.