PM Surya Ghar Muft Bijli Yojana (PM-SGMBY) is transforming India’s solar power sector, creating a significant opportunity worth Rs 1.2 trillion, according to a recent report by SBI Capital Markets. The initiative aims to install 30 GW of residential rooftop solar capacity and offers substantial subsidies that reduce payback periods, making solar energy more accessible for Indian.
By providing subsidies of up to Rs 30,000 per kW for installations up to 2 kW, the scheme has drastically cut the payback period for users to just 3.5 years, down from the previous average of nine years. This financial incentive has led to a notable increase in rooftop solar installations, with a tenfold rise since the program's launch. Residential rooftops are becoming the cornerstone of this growth, particularly in states with high electricity tariffs and favorable net metering policies.
The Rs 1.2 trillion market opportunity is mainly driven by solar modules, which account for Rs 480 billion, followed by inverters at Rs 275 billion, electrical components at Rs 200 billion, and mounting structures at Rs 90 billion. Project developers and Engineering, Procurement, and Construction (EPC) companies are also positioned to benefit significantly, utilizing a capital expenditure model where consumers own and finance their solar systems to access government subsidies.
This initiative not only offers cost savings but also empowers households to achieve energy self-reliance by producing and consuming their electricity. Additionally, surplus power can be sold back to the grid, providing further financial benefits. States like Gujarat, Maharashtra, and Tamil Nadu are leading in solar adoption, driven by industrialization, tariff differences, and state-level incentives. Together, these states account for 70% of India’s rooftop solar capacity, with Gujarat contributing 4,822 MW alone.
Rooftop solar installations have seen a remarkable 53% year-on-year growth, with off-grid capacity soaring by 197% in 2024. The declining costs of solar modules and EPC services have further encouraged non-utility solar installations, projected to add 20 GW annually by FY27. This growth highlights the increasing attractiveness of distributed solar solutions, which are becoming more affordable and accessible.
The ripple effects of PM-SGMBY extend across the entire solar ecosystem, benefiting manufacturers, project developers, and EPC players alike. By fostering public awareness, maintaining policy support, and promoting technological advancements, the program is not only accelerating India’s energy transition but also addressing critical challenges like rising electricity costs and energy security.
