Top 5 Government Subsidies and Incentives for Industrial Solar Projects in India 

Description

India’s renewable energy landscape is levelling up, with solar leading the charge. Industrial sectors perceive the advantages of solar, that is, to sustain the environment and to remain financially viable. To promote the switch, the Indian government has promulgated various solar subsidies India schemes and incentives to promote industrial solar projects. The purpose of these is to reduce initial capital expenses, improve the rate of return on investments and be able to develop solar as an investment option for industries throughout a nation.

Let us explore the leading 5 government subsidies and incentives for industrial solar projects in India and how companies can utilize them to optimize their economic and environmental advantages.

1. Accelerated Depreciation Allowance (80%)

Accelerated Depreciation is one of the best financial incentives offered for industrial solar projects. Through this scheme, industries setting up solar power systems can avail up to 80% depreciation in the first year of installation and enjoy a quick reduction in taxable income.

The balance 20% depreciation can then be claimed in the subsequent years, thus providing a source of further savings. This scheme has thus made solar power system installations commercially viable for energy-intensive industries, while in a way, reducing the actual cost of solar for companies. The AD Allowance thereby acts as a catalyst for the commercial adoption of solar.

It has served as an impetus for the commercial adoption of solar energy at large scale in India, especially in the categories of industrial rooftops and ground-mounted solar plants. Most solar installations on the industrial front today have payback periods of 3 to 5 years, a life-span made possible largely by accelerated depreciation benefits.

2. PM-KUSUM Scheme (Component C)

The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) Scheme is primarily designed for rural energy solutions but also impacts industrial setups in rural areas. Component C of the scheme deals with grid-connected solar power plants, which are subsidised for installation, hence reducing the upfront investment burden.

This scheme encourages the use of solar power by small- and medium-scale industries located in rural areas. Through financial support, it ensures that such industrial units can install solar power systems without straining their working capital. Consequently, PM-KUSUM, apart from promoting renewable energy, also spurs rural industrial development and rural electricity dependence on the grid. 

Being a government-supported scheme for rural industrialised solar projects, it is popular amongst industries as it saves operational costs.

3. Capital Subsidy for Rooftop Solar Systems

Another important incentive is the capital subsidy for roof-top solar systems provided by the Ministry of New and Renewable Energy (MNRE). This operating incentive fund, in large measure, covers the total install cost of the solar PV system so that the industry can install solar energy without a high initial expense.

The subsidized solar panels India supplied under this scheme further lowered the cost of the gasification. According to the commercial installation specifications for agency suppliers the capital subsidy could cover 20% - 40% of the total project cost depending on the installation size and project location.  Subsequently, it demonstrates very attractive returns for roof-top solar installations for all sizes of industries including SMEs.

The capital subsidy provided by suppliers eases the operating costs of upfront costs so it encourages the industry to install roof top solar panels on their warehousing facilities, factories and administration plants. Beyond monetary savings on electrical costs, roof-top solar projects reduce the reliance on conventional electrical power, impact operational costs, and contribute towards sustainability initiatives. 

4. Net Metering Policy

Commercial Solar PV Projects are also benefitting from the valuable Net Metering Policy. With this policy, industries can export surplus solar power back to the grid, and then receive credits that offset future electricity costs. Instead of buying electricity off-grid, industries with solar capacity can sell extra energy to their particular state electricity boards and offset their use of electricity over time.

Net metering also increases the potential use of solar systems and speeds up the return on investment. Each state has differing net metering policies, with the more progressive states allowing higher or faster credit payments from the grid to offset future costs.

It is an excellent flexibility for a commercial solar project, particularly for opportunities where their energy consumption fluctuates. Govt subsidy on solar energy in India encourages businesses to produce more solar energy than they consume while simultaneously enhancing the energy security of the region.

5. State-Specific Incentives

In addition to a central government program, the state governments have developed incentives to support the uptake of solar energy. These incentives can supplement national programs while allowing unique offerings in line with each state's industrial energy requirements.

For instance, Maharashtra has installed exceeding 1,000 MW of rooftop solar with the  Pradhan Mantri Suryaghar Free Electricity Scheme. Subsidies received by consumers were between ₹30,000 to ₹78,000 based on the system size. On the contrary, Uttar Pradesh has invested in solar manufacturing to provide industrial units with lower-priced electricity besides adopting clean energy.

The solar subsidies India is now providing at the state level helps industries further reduce their operating costs while also boosting domestic solar manufacturing and installation. When combined with central government schemes, solar uptake is increasingly a financially viable option for industrial stakeholders.

Additional Benefits of Solar Adoption for Industries

Besides the financial advantages associated with utility-scale solar projects, there are multiple long-term benefits:

• Energy independence: Having a lower dependency on the electricity grid usually results in lower reliance especially on fluctuated grid electricity tariffs.

• Sustainability goals: Supports companies' ESG (Environmental, Social and Governance) targets or enhanced corporate social responsibility.

• Improved ROI: Financial returns are accelerated because of subsidies, net metering and the reduced payback period on investment.

• Government regulatory alignment: Aligns an industry with national energy objectives and renewable energy targets.

The combination of financial incentives, tax benefits and operational efficiencies are the strategies for allowing solar to be adopted by a forward-looking industrial business.

Final Thought

To summarize, the Indian government provides strong solar subsidies India and other incentives make industrial solar projects economically and environmentally viable. Entities exploring subsidized solar panels India and the govt subsidy on solar energy in India can optimize savings by partnering with industry innovators like Inglo that can provide customized solar solutions that are both for performance and cost-effectiveness.