Solar subsidy in Maharashtra: a case study

In a previous post, we showed through detailed analysis that rooftop solar is often an easy economic decision in Maharashtra. In this post, we will walk you through a case of an Oorjan customer who has opted to apply for a solar subsidy, and show you how favorable the economics could be when the subsidy comes through.

First, a quick note about rooftop solar subsidies and how they are working today. MNRE has previously announced a 30% subsidy for rooftop solar projects. In Maharashtra this solar subsidy is being administered by MEDA (Maharashtra Energy Development Agency). Rooftop owners can submit their subsidy application to MEDA through agents. From our experience, the agents are able to submit the application and obtain acknowledgement of the same from MEDA within 2-3 weeks.  With subsidy application involved, the rooftop solar deployment timeline would look like this:

  1. Design and price rooftop solar system (<10 minutes through www.oorjan.com)
  2. Site visit and final quote from Oorjan (2 weeks)
  3. Apply for grid-connected system approval from MSEDCL (1 – 2 weeks)
  4. Apply for subsidy with MEDA (2 weeks)
  5. Obtain project financing (1-2 weeks, subject to credit check, with Oorjan)
  6. Project installation (on site work, 1 week)
  7. Net metering approval and system commissioning (2-3 weeks)
  8. Subsidy disbursal (direct to rooftop owner, timing unclear at this time)

This summer, our customer Sunil contacted us from Pune. He was facing ever-increasing electricity bills, and wanted to go solar as a way of saving money. We found that his household was consuming an average of 640 units of electricity a month and his monthly power bill was approaching ₹7000. While the power needs of his household required a larger system, Sunil’s residential power line had a sanctioned load of 4kW, which was the largest system he could install per MSEDCL policy. At that point, Sunil’s monthly cash flow scenarios looked like this:

 

Solar, No Loan Solar, With Loan* No Solar
Down Payment ₹325,000 ₹48,750 0
Cash Flow Projections, Monthly
Solar Power Generated (units) 540 540 0
Net Electricity Usage 100 100 640
Net Electricity Bill ₹479.78 ₹479.78 ₹6,879.43
EMI ₹0.00 ₹4,766.46 ₹0.00
Monthly Maintenance Cost ₹450.00 ₹450.00 ₹0.00
Monthly Out of Pocket ₹929.78 ₹5,696.24 ₹6,879.43

Even with financing costs, going solar was a compelling financial option for Sunil. In addition, he also wanted to avail the MNRE subsidy. For this, he worked directly with an agent to submit the subsidy application to MEDA – there was some documentation required, and the payment of an administration fee to the agent to make this happen. Once the application was submitted, and acknowledged by MEDA, the bank disbursed the funds for the installation to proceed.

For now, the economics of the project are as above. However, when the subsidy is disbursed, Sunil will receive a lump sum payment that can be used to pay down the loan balance. At this time, the timing of subsidy disbursement is unclear. Let us assume that the subsidy will come through in a year. At that time, Sunil will receive 97,500 as a lump sum payment. If he uses that entire amount to pay down his loan balance, his monthly expenses for the remaining life of the loan would look like this:

 

Solar, After Subsidy No Solar
Subsidy Payment ₹97,500 0
Cash Flow Projections, Monthly
Solar Power Generated (units) 540 0
Net Electricity Usage 100 640
Net Electricity Bill ₹479.78 ₹6,879.43
EMI (after principal pay down) ₹3,336.52 ₹0.00
Monthly Maintenance Cost ₹450.00 ₹0.00
Monthly Out of Pocket ₹4,266.30 ₹6,879.43

 

In a year, Sunil would be well on his way to owning a rooftop solar PV system, while saving around ₹2,600 per month. While the timing of subsidy payment is not yet clear, MEDA is said to be working on an online tracker to check the status of subsidy applications. In general, subsidies will be disbursed directly to the rooftop owner as and when they are approved. As seen in this case, they can make a substantial difference in the cost of going solar, and make rooftop solar even more attractive financially.

If you’re in Maharashtra and have been thinking about going solar, get in touch with Oorjan (http://oorjan.com). Our online estimator can give you a solar price quote in minutes. You can sign up for a site visit to finalize the quote, or schedule a call with our team if you have questions. We can also help you secure project financing, or identify an agent to help you submit a subsidy application to MEDA. Loan approvals for EMI schemes typically take 2-3 weeks, while pay-per-unit agreements take upto 6 weeks. We also provide a user-friendly app to monitor system performance once your project is installed, and provide periodic alerts. There has been no better time to go solar!

4 thoughts on “Solar subsidy in Maharashtra: a case study

  1. Solar subsidy is applicable to education institutions. Is it applicable to residential and commercial? Can you provide me details?

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    1. Hi – subsidy is available for residential units as well – both independent houses and housing societies.
      For commercial installation, the financial benefit of accelerated depreciation is available. No direct subsidy.

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  2. Hi…my name is prashant reddy i want to water pump solar 10 hp…maharashtra govt declared 95% subsidy on solar water plz..tell me sir what is the prociser
    Mo no..7020452010
    At post degloor dist nanded..maharashtra

    Like

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