Type: Schemes

Why in the News?

India’s flagship decentralised solar schemes, PM Surya Ghar Yojana and PM-KUSUM, have achieved only about 13 GW capacity against a target of 40 GW. This has prompted the Parliamentary Estimates Committee to examine implementation bottlenecks.

Background

1. Solar Dominance: Solar power now accounts for nearly 30% of India’s installed electricity generation capacity.
2. Rapid Capacity Addition: India added more than 50 GW of solar capacity during the last two years.
3. Global Position: India added more solar power in 2025 than any country except China.

Why is Decentralised Solar Power Becoming Central to India’s Energy Transition?

Decentralised solar power (DRE) generates electricity at or near the point of consumption rather than relying on large, centralized power plants. This approach eliminates long-distance transmission losses and empowers local communities by providing affordable, continuous, and reliable energy

1. Rising Electricity Demand: Increasing temperatures, urbanisation and economic growth are pushing electricity demand upwards.
2. Land Constraints: Availability of land for large utility-scale solar parks is becoming increasingly limited.
3. Climate Resilience: Distributed generation strengthens energy security during periods of high demand and climatic stress.
4. Peak Demand Management: Solar power significantly contributed to meeting daytime peak demand during April-May 2026.
5. Hydropower Constraints: Hydropower capacity expansion has stagnated, reducing its ability to meet incremental demand.
   1. Stagnating Share: Hydropower’s share in India’s installed power capacity has declined from around 25% in the early 1990s to about 10% today, despite growth in overall electricity demand.
   2. Limited Capacity Addition: India added only about 5 GW of large hydropower capacity between 2014 and 2024, compared to over 100 GW of solar capacity during the same period.
   3. Current Capacity: India’s installed hydropower capacity stands at roughly 48-49 GW, while solar capacity has crossed 100 GW.
   4. Climate Vulnerability: Erratic monsoons, changing river flows, environmental clearances, rehabilitation issues, and long gestation periods have slowed hydropower expansion.
   5. Energy Transition Implication: With hydropower unable to expand rapidly enough to meet rising demand, solar, particularly decentralised solar, is increasingly expected to meet incremental electricity requirements.

What are the Key Features of PM Surya Ghar Yojana and PM-KUSUM?

PM Surya Ghar Yojana

1. Household Coverage: Targets rooftop solar installation in 1 crore households.
2. Free Electricity: Provides electricity benefits of up to 300 units per month.
3. Capital Subsidy: Offers direct subsidy support for rooftop solar equipment.
4. Decentralised Generation: Encourages household-level electricity production and grid integration.

Progress

PM-KUSUM

The Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM) is an initiative by the Ministry of New and Renewable Energy (MNRE). It provides farmers with heavy subsidies for solar agricultural pumps and solar power plants, designed to generate income, provide daytime irrigation, and replace expensive diesel or grid power

1. Farmer-Centric Design: Supports farmers in establishing decentralised solar infrastructure.
2. Solar Plants on Unused Land: Enables installation of small solar plants on unused agricultural land.
3. Solar Water Pumps: Supports both standalone and grid-connected solar irrigation pumps.
4. Additional Income: Allows sale of surplus electricity to the grid.
5. Cost Reduction: Reduces diesel and conventional electricity expenses.

Progress

How Successful Have These Flagship Programmes Been?

1. Combined Budget: Approximately ₹95,000 crore.
2. Combined Capacity Created: About 13 GW as of 31 May 2026.
3. Target Capacity: 40 GW by the end of the current financial year.
4. Achievement Gap: Only around one-third of the targeted capacity achieved.
5. PM-KUSUM Delay: Initially targeted for completion by 2022 but extended until the end of the current financial year due to pandemic-related disruptions.
6. Best Performing Component: Standalone off-grid solar water pumps under PM-KUSUM.

How is Performance Highly Uneven Across States?

PM Surya Ghar Better Performers

PM Surya Ghar Underperformers

How Do Power Subsidies Affect Solar Adoption?

1. Distorted Economic Incentives: Free or highly subsidised electricity reduces the financial attractiveness of investing in rooftop solar systems.
2. Reduced Payback Benefits: Consumers receiving subsidised electricity perceive limited savings from solar installations, resulting in lower adoption rates.
3. High Upfront Cost Sensitivity: Households are less willing to incur substantial initial costs for solar systems when electricity is already available at little or no cost.
4. Subsidy-Driven Consumer Behaviour: Existing subsidy regimes encourage continued dependence on grid electricity rather than self-generation through rooftop solar.
5. Policy Contradiction: Simultaneous promotion of rooftop solar and provision of free electricity creates conflicting incentives for consumers.
6. Official Recognition: The Ministry of New and Renewable Energy informed the Parliamentary Estimates Committee that free electricity schemes have emerged as a major constraint to PM Surya Ghar implementation.

Evidence from States

1. Punjab: Provides 300 free units to households and free electricity for agricultural tubewells; annual power subsidy expenditure exceeds ₹20,000 crore.
2. Karnataka: Electricity subsidy bill stands at approximately ₹27,000 crore.
3. Tamil Nadu: Electricity subsidy expenditure is around ₹15,700 crore.

Why Does the Upfront Cost Remain the Biggest Barrier?

1. High Initial Investment: Solar installations often require investment of several lakh rupees.
2. Delayed Returns: Benefits accrue gradually through reduced electricity bills and sale of surplus power.
3. Affordability Challenge: Many households and farmers struggle to mobilise upfront capital despite long-term savings.
4. Credit Constraints: Access to affordable financing remains limited.
5. Committee Recommendation: Parliamentary Estimates Committee recommended mechanisms that reduce upfront payment burdens.

Why Have Some States Succeeded Despite Offering Subsidised Power?

1. Additional Incentives: Gujarat, Rajasthan and Uttar Pradesh supplemented central support with state-level incentives.
2. Policy Convergence: State support reduced effective installation costs.
3. Consumer Confidence: Additional incentives improved economic viability.
4. Administrative Efficiency: Faster approvals and implementation improved adoption rates.
5. Evidence of Success: These states account for nearly 70% of the total rooftop solar installations achieved under PM Surya Ghar.

What are the Long-Term Economic Benefits of Decentralised Solar Power?

1. Subsidy Rationalisation: Reduces long-term dependence on recurring electricity subsidies.
2. Fiscal Savings: Full implementation of PM Surya Ghar could save approximately ₹75,000 crore annually in electricity-related expenditure.
3. Consumer Empowerment: Converts consumers into electricity producers.
4. Grid Stability: Reduces transmission losses and distribution burden.
5. Energy Security: Diversifies generation sources and reduces fuel dependence.
6. Climate Commitments: Supports India’s renewable energy and net-zero objectives.

What is the Growing Link Between Solar Power and Electricity Demand?

1. Demand Surge: Rising temperatures are increasing electricity consumption.
2. Climate Variability: Lower rainfall forecasts may reduce hydropower availability.
3. Summer Demand Peaks: Solar generation is increasingly meeting daytime peak loads.
4. Future Energy Mix: Solar is expected to become India’s second-largest source of electricity generation, overtaking hydropower.
5. Decentralisation Advantage: Distributed generation can cushion local supply-demand imbalances.

Conclusion

India’s clean energy transition increasingly depends on decentralised solar generation alongside utility-scale renewable projects. While PM Surya Ghar and PM-KUSUM have demonstrated their transformative potential, persistent barriers such as high upfront costs and distortionary electricity subsidies continue to constrain adoption. Bridging this gap through targeted incentives, affordable financing and subsidy reforms will determine whether decentralised solar power can become a major pillar of India’s energy security and climate strategy.

PYQ Relevance

[UPSC 2020] Describe the benefits of deriving electric energy from sunlight in contrast to the conventional energy generation. What are the initiatives offered by our Government for this purpose?

Linkage: The PYQ focuses on solar energy as a sustainable alternative to conventional power sources and government efforts to promote its adoption. PM Surya Ghar and PM-KUSUM are among India’s flagship initiatives for promoting decentralised solar energy. The article evaluates their achievements, implementation challenges, and significance for India’s energy security and clean energy transition.