In February 2024, the Government of India launched a flagship initiative, PM Surya Ghar: Muft Bijli Yojana, which aims to transform the residential energy landscape by solarising rooftops and offering free electricity to millions of households. With an investment of over ₹75,021 crore, the scheme envisages installing rooftop solar (RTS) systems for one crore (10 million) households, enabling them to receive up to 300 units of free electricity every month.
India, as part of its commitments under climate accords and its domestic energy targets, has been steadily increasing its renewable energy capacity. Rooftop solar has been one of the lagging sectors due to high upfront costs, awareness gaps, regulatory barriers, and lack of financing. This scheme seeks to address many of these concerns. In this article, we explore the scheme in detail: what it offers, how it works, who is eligible, what benefits it carries, what challenges it may face, and what its likely impact will be over the next few years.
Background and Rationale
India is a sunny country: many regions receive 300+ sunny days a year. Exploiting solar energy, especially via rooftops, reduces transmission losses, grid burden, and dependence on fossil fuels.
The government has set ambitious targets: achieving 500 GW of renewable energy capacity by 2030, a significant share from rooftop solar. Rooftop solar helps both in increasing generation capacity and in distributing it.
For many households, electricity bills are a heavy recurring cost. By giving free power (up to some limit) and reducing bills through solar generation + net metering, financial stress eases.
Reducing carbon emissions: moving to solar from more polluting sources helps with climate goals.
Key Features of the Scheme
Here are the major features / components of PM Surya Ghar: Muft Bijli Yojana:
Launch & Budget The scheme was formally approved by the Union Cabinet on ~29 February 2024. The scheme has total outlay of ₹75,021 crore. Implementation is planned through FY 2026-27.
Target To benefit one crore households (residential) by providing rooftop solar panels + free electricity (up to 300 units per month).
Capacity & Solar Generation Goal Add about 30 GW of rooftop solar capacity from the residential sector. Expected to generate around 1,000 billion units (BUs) of electricity over the lifetime, and reduce 720 million tonnes of CO₂ equivalent over 25 years.
Subsidy / Central Financial Assistance (CFA) Subsidy for rooftop systems: up to 2 kW – 60% of system cost; for 2-3 kW – the additional cost beyond 2 kW is covered at 40%. Maximum cap at 3 kW. In practical numbers: approx ₹30,000 subsidy for a 1 kW system; ₹60,000 for 2 kW; ₹78,000 for 3 kW system.
Free Electricity Monthly free electricity allowance up to 300 units for participating households. That is expected to reduce electricity bills or eliminate them up to that energy usage.
Loans / Financing Low-interest / concessional loans (~7%) without collateral are to be made available for residential rooftop solar systems up to 3 kW.
Implementation Structure A National Programme Implementation Agency (NPIA) at the national level; State Implementation Agencies (SIAs) at state/UT level. The DISCOMs or Power/Energy Departments of states are typically the SIAs.
Facilitation by DISCOMs Among required responsibilities are: ensuring net-meters are available; timely inspection and commissioning; vendor registration and management; interdepartmental coordination (e.g. for government buildings).
Other Components
• Model Solar Village: one in each district as a role model for rooftop solar adoption in rural areas.
• Incentives for Urban Local Bodies and Panchayati Raj Institutions to promote RTS.
• Payment security mechanisms for RESCO (Renewable Energy Service Company) models.
• A fund for innovative rooftop solar projects.
Eligibility Criteria
To benefit from the scheme, households must satisfy certain eligibility requirements. These include:
Citizenship: Must be Indian citizens.
Valid Electricity Connection: The house must already have a valid electricity connection.
Own a suitable rooftop: The household should own a house with a roof suitable for installing solar panels (space, structural strength, unobstructed sunlight etc.).
No previous subsidy: Households that have already availed subsidy for rooftop solar panels (similar scheme) may be ineligible.
How to Apply / Process of Implementation
Here is a step-by-step look at how the scheme works from the household’s perspective and how it’s administered:
Registration on National Portal
Interested households have to apply via the national portal (for example, pmsuryaghar.gov.in). They select their state, their DISCOM, and fill in required details (electricity connection number, bank account, address, details of rooftop etc.). The portal also provides tools for deciding system size, vendor ratings, benefits calculator etc.
Selection of Vendor & System
Once eligibility is confirmed, the household can choose from registered vendors listed on the portal. The system size (up to 3 kW) is chosen based on need and rooftop capacity.
Financing / Subsidy
The Central Financial Assistance (subsidy) is approved and disbursed (often directly to the beneficiary’s bank account). If required, concessional loan is arranged through partner banks or financial institutions.
Installation & Commissioning
The solar panels and related RTS equipment are installed. The DISCOM/state agency/power utility inspects, ensures net-metering where needed, and commissions the system.
Monthly Free Electricity Allocation
Once system is operational, the household gets up to 300 units free electricity each month (either via generation or net metering). Any surplus can be sold back (to DISCOM) under net-metering norms.
Monitoring & Maintenance
Routine checks, maintenance of panels, ensuring that performance is as expected over time. DISCOMs or registered vendors might offer O&M services. The scheme envisages making ecosystem support to ensure reliability.
Expected Benefits and Impacts
The scheme, if executed well, is expected to bring multiple benefits, both to individuals and for the country as a whole.
For Households
Reduced Electricity Bills: With up to 300 units free each month, especially for lower and middle-income households, electricity bills would drop significantly or even be eliminated for basic usage.
Income via Surplus Power: Households generating more than their consumption can feed surplus back to the grid and earn via net metering.
Energy Security & Reliability: Dependence on grid supply (and its fluctuations or outages) may be reduced, especially during daylight hours.
Environmental Benefit: Cleaner air, reduced dependence on fossil fuel based electricity, etc.
For the Nation / Systemic Benefits
Addition of Solar Capacity: Target of adding ~30 GW rooftop solar in the residential domain.
Electricity Generation: Estimation of generating 1,000 BUs of electricity over the life of these systems.
CO₂ Emission Reduction: Estimated reduction of approx 720 million tonnes of CO₂ equivalent emissions over 25 years.
Job Creation: Jobs in manufacturing of solar modules/panels, in supply chain, installation, maintenance, sales etc. The scheme estimates about 17 lakh (1.7 million) direct jobs.
Boost to Domestic Solar Industry: Demand for solar panels, inverters, balance-of-system components will increase; vendor networks will be strengthened.
Progress toward India’s Renewable / Climate Goals: Helps in meeting targets under NDCs, including renewable share, emissions intensity, etc.
Financials & Economics
Subsidy Amounts: As noted, ₹30,000 for 1 kW, ₹60,000 for 2 kW, ₹78,000 for 3 kW systems (CFA from central government).
Loan Terms: Concessional loan (~7% interest), collateral-free for residential RTS systems up to 3 kW.
Out-of-Pocket Cost: After subsidy (and any state subsidy, if applicable), the consumer bears the remaining cost. The more the free units usage, the quicker the pay-back in terms of avoided electricity bills.
Return on Investment: Depends on electricity tariff saved plus any revenue from selling surplus energy. Over ~20-25 years (typical lifespan of panels), the system can result in net gain.
Timeline & Implementation Schedule
The scheme is designed to be implemented until Financial Year 2026-27.
Already, many states are reporting installations. For example, Gujarat had installed ~3.3 lakh systems (as of May 2025), generating ~1,232 MW, and got central subsidies of ~₹2,362 crore to ~3.03 lakh beneficiaries.
The government has launched awareness campaigns to promote applications. Urban local bodies, Panchayats, etc., are being involved.
Challenges & Potential Barriers
Despite strong design, several challenges may affect full success. Some of them are:
High Upfront Costs (Even After Subsidy)
Even after subsidy and loans, for many households the remaining cost may be substantial. For low-income households, savings vs cost may take time.
Roof Suitability / Space Constraints
Not all rooftops are suitable (shade issues, structural strength, roofing material). Some houses may not have enough area.
Awareness Gaps & Application Process
Many people may not be aware of the scheme, vendors, or how to apply. The national portal helps, but awareness campaigns must reach to rural and remote areas.
Quality & Maintenance
Poor quality panels, incorrect installations, lack of maintenance can reduce efficiency. Ensuring certified vendors and oversight is crucial.
Net Metering / Distribution Utility (DISCOM) Issues
Availability of net meters, timely inspection and commissioning, grid-interconnection delays etc. can slow implementation.
Loan Access
Even collateral-free loans with low interest may have procedural hurdles for some households (paperwork, credit history, bank branch access etc.).
Weather / Generation Variability
Solar generation depends on sunlight; in rainy or winter months generation reduces. Households will still need grid supply or backup.
Regulatory / State Differences
Electricity policy (tariffs, net metering) differs by state; DISCOM cooperation may vary. Some states may have additional subsidies while others may not, causing disparity.
Grid Integration / Surplus Management
When many households feed surplus energy, technical / regulatory challenges for distribution companies and grid stability may arise.
Case Studies / Progress Across States
Some early data shows differential adoption across states:
Gujarat: Leading in installations under this scheme. As of May 2025, ~3.36 lakh rooftop systems installed, ~1,232 MW generation capacity. Gujarat received central subsidies to ~3.03 lakh beneficiaries.
Maharashtra: Vidarbha region stands out in installations under the yojana.
Rajasthan, Uttar Pradesh, Kerala: Some of the top states in number of installations.
These early successes show potential but also highlight that some states are ahead in implementation, vendor readiness, applicant awareness etc.
Socio-economic & Environmental Impact
Carbon Footprint Reduction: Estimated reduction of ~720 million tonnes CO₂ over lifetime of installed systems.
Improved Access to Clean Energy: Many households in rural areas or towns with erratic supply will benefit.
Energy Equity: By offering free units and pushing for solar rooftops, the scheme helps reduce disparity in energy access.
Economic Growth & Employment: The solar rooftop sector will see growth in local manufacturing of panels, components; installation & maintenance work will engage many tradespeople and technicians.
Reduced Pollution & Improved Health: Indirectly, reduced fossil fuel power generation lowers air pollution, benefiting public health.
Strategic Considerations for Better Implementation
To ensure the scheme delivers its promise fully, these strategic steps are important:
Strong Monitoring & Transparency: Regular reports on installations (by state/district), timelines, subsidy disbursement etc., to build trust and ensure accountability.
Vendor Certification & Quality Standards: Ensuring only certified modules/inverters/vendors are used; checking warranties; enforcing quality control in installation.
Outreach & Awareness Campaigns: Especially in rural, remote, low-income communities. Simplified, local language information; use of gram sabhas, local governing bodies etc.
Flexible Financing Models: For households that can’t afford remaining cost, micro-finance, partnerships with banks for easier loan disbursement, subsidies etc.
Integration with State Policies: States may add their own subsidies, simplify net metering rules, reduce procedural delays, including approvals, inspections, electricity connections.
Operational Support & Maintenance: Help for maintenance of solar systems, cleaning, occasional repair, monitoring so that performance doesn’t degrade.
Grid Infrastructure Strengthening: To accommodate surplus power, ensure net metering, avoid losses, and maintain stability.
Assessment & Feedback: Periodic evaluation of the scheme’s outcomes vs targets; feedback from households to improve processes, reduce friction.
Limitations & Criticisms
Some critiques and limitations that have been voiced or may be raised:
“Free electricity” limit vs reality: While 300 units are declared, in many households the generated solar electricity may be less; or grid constraints may reduce net metering effectiveness.
Not covering very low-income / informal households: Ownership of roof and electricity connection requirement may exclude some poorer households (e.g. renters, informal housing).
Implementation Delays: Practical delays in vendor availability, net metering supply, inspections, loan processing.
State Level Bottlenecks: In some states, bureaucracy, grid infrastructure, or lack of cooperation from DISCOMs may slow roll-out.
Roof and technical constraints: Shade, orientation, structural issues may make solar installations less efficient for some.
Comparing With Other Schemes / Global Practice
India has had previous rooftop solar subsidy schemes (e.g. earlier ministerial programs), net metering policies, etc. This scheme builds upon those but at larger scale.
Globally, many countries offer feed-in tariffs, net metering, subsidies; India’s model combines free electricity, central subsidy, and concessional loans.
The size (one crore households) is ambitious. The success depends on execution, cost control, and stakeholder participation (banks, vendors, DISCOMs, states, households).
What Households Need to Know / Practical Tips
For households intending to apply or benefiting from the scheme, some practical advice:
Check eligibility carefully: Roof suitability, ownership, electricity connection.
Estimate your consumption: If your monthly consumption is less than or close to 300 units, the free supply may suffice; if much higher, decide whether to size system accordingly.
Choose vendor wisely: Go for registered vendors with good ratings; ensure they provide warranties on panels/inverters; check if past work is good.
Understand net-metering rules in your state: Some states may have different rates, charges, or delays in buy-back of surplus; check details.
Maintain panels: Clean, ensure no shading, periodic servicing to ensure good output.
Review terms of loan: Even if loan is collateral-free, interest, repayment schedule, bank charges etc. should be clear.
Check government portal: For information, calculators, subsidy status etc. Use official portals: pmsuryaghar.gov.in etc.
Long-Term Outlook & Sustainability
If properly implemented, PM Surya Ghar: Muft Bijli Yojana could have a transformative effect:
Push India significantly toward its solar / renewable energy targets.
Foster local solar-equipment manufacturing, lowering costs over time.
Create a culture of decentralized clean energy, reducing grid stress and transmission losses.
Lower dependence on imported fossil fuels and variability due to fuel price shocks.
Help households build resilience: especially as climate events grow, clean distributed energy becomes more valuable.
However, sustaining free electricity up to 300 units per month over many years depends on maintaining subsidy budgets, ensuring grid integration works, keeping costs of components (panels, inverters, batteries etc.) under control, and ensuring sustained political and administrative will.
Conclusion
PM Surya Ghar: Muft Bijli Yojana is one of India’s boldest and most ambitious residential solar schemes. With its large financial outlay, strong subsidy support, free electricity component, and focus on one crore households, it seeks to democratize access to clean energy and provide relief to households burdened with electricity bills.
Its success will depend not just on policy design but on execution: awareness, state cooperation, vendor quality, financing, maintenance, and equitable access. If those align, India could see major progress in rooftop solar deployment, reductions in emissions, improved energy access, and steps forward in sustainable development.
