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Impact Of Basic Customs Duty Hike On Residential Solar

10 min read | By Pankaj Mohanpuria

In response to a long-standing demand from India’s solar manufacturing sector, the Ministry of New & Renewable Energy (MNRE) will implement Basic Customs Duty (BCD) w.e.f. April 2022. This move will protect domestic solar manufacturers from the stiff price competition from imported solar modules. Imposing a high tax rate will work in favour of the domestic solar industry in the short term as the price gap between imported solar components and locally-produced solar components will be be bridged.

However, this is just one side of how this hike in basic import duty will impact India’s solar sector. The price of home solar systems is expected to rise as material costs across the supply chain become costlier. A home solar system comprises of solar panels, inverter, cables and mounting structure.

Rise in the cost of solar modules is bound to increase the price of a home solar system as module price comprises more than 50% share of the price of the whole solar system. But in order to estimate how much the price is likely to increase, read more. 

Upcoming Changes in Solar Equipment Prices

India is chasing an ambitious goal of 280 GW of installed solar energy capacity by 2030. However, the country has been heavily dependent on imports so far. This has worked against the domestic solar manufacturers as several are on the verge of shutting down. China alone accounts for 80% of the total solar imports, while the rest consists of imports from Malaysia, Thailand, and Vietnam.

The Ministry of New and Renewable Energy recognizes the urgency to protect domestic solar component manufacturers against stiff price competition from imported ones and reduce the dominance of low-cost imports in the Indian solar markets. 

The Basic Customs Duty is a move that will help boost domestic manufacturing of solar components. As per the proposed duty structure, a basic customs duty of 40% on solar modules and 25% on solar cells will come into force on all solar imports starting April 1st, 2022. This tax imposition is expected to be a gamechanger for India’s Atmanirbhar Bharat vision. It will do away with the cost advantage that has allowed imported solar components so far to dominate Indian markets, providing Indian manufacturers a level playing field and the confidence to scale their capacity and performance.

This has come after the BCD for imported solar inverters was raised from 5% to 20% effective from February 2nd, 2021.

Impact of BCD Price Changes on Solar Industry

Long after the expiry of Safeguard Duty in July 2021, BCD is set to take effect from April 1st, 2022, though the intent of this change was already shared by MNRE in early 2021. As a result, the industry will see a slight increase in solar power tariffs being offered to Commercial & Industrial customers due to expensive solar components.

As per ICRA, the capital cost of a solar power plant project will increase by 23-24%. The official notification from MNRE also clarifies that there is no provision for exempting projects already auctioned. This is no brainer that the same price rise will happen for homeowners as well looking to purchase home solar plants for their house. 

Apart from the low cost, the higher efficiency of imported rooftop solar panels is also another major factor why some of the developers and power producers prefer imported solar panels. But this is set to change as domestic solar manufacturers are also working on efficiency and ramping up their production capacities. Also, this hike in solar plant cost is anticipated to be a short-term disruption until local manufacturing achieves economies of scale and becomes even more efficient than the imported solar modules.

To that end, BCD will create a supportive ecosystem for the domestic solar industry by providing relief against the competitive environment created by low-cost foreign imports, especially China. We should also note that import barriers can only be temporary measures. Eventually, domestic solar manufacturing will succeed only if we are able to compete in the global marketplace – in terms of price, technology, and scale.

Why Get Solar for your Home Now ?

The basic customs duty on solar components will be implemented from April 1st, 2022, meaning the current solar prices are still affordable. Hence, if you are planning to solarize your home in the near future, purchases made during this time will still come at old prices. 

Moreover, there is the added benefit of the simplified rooftop solar subsidy scheme recently introduced by MNRE. This updated subsidy scheme allows homeowners to get solar from any developer of their choice and avail subsidy through a simple online application process. The solar subsidy can further bring down the cost of rooftop solar for your home by up to 40%. 

Harness the energy of the sun to power your gadgets, air conditioning and heating systems, and your entire home with our custom residential rooftop solar systems from HomeScape by Amplus Solar. Our end-to-end home solar power solutions help reduce your energy costs by up to 90%. Designed for luxury and engineered for durability, our rooftop installations come with a 25 years warranty and the investment practically pays for itself in as less as 5 years.

Our renewable energy solutions for homes also include add-ons like high-quality battery backups and a smart solar performance monitoring system to help you keep your solar plant’s health in check. If you want to learn about current solar panel prices, partner with HomeScape – one of the leading residential solar companies in India.

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Solar Subsidy for the Residential Sector in Punjab 2021 | HomeScape

7 min read | By admin

The Government of India is pushing the goal of a “solar-powered green city” in every state, and it notes that the idea is in line with the global solar energy trends. Solar panel subsidy in Punjab is an initiative to make clean and green energy affordable and accessible. Like many other states, the residents of Punjab also have an opportunity to increase their savings by eliminating high electricity bills and their dependence on the government grid.

Is There Any Subsidy on Rooftop Solar in Punjab?

The Punjab State Power Corporation Limited (PSPCL) offers subsidy support for grid-connected rooftop solar systems of capacity ranging from 1 kW to 10 kW. It is expected that solar panel prices in Punjab after subsidy will be more affordable for the residential sector consumers.

The subsidy/Central Financial Assistance (CFA) for a rooftop PV solar system will depend on the capacity of your solar system and its benchmarked cost or on the cost calculated through a competitive process, if lower.

  • For up to 3kW capacity of RTS system, the CFA applicable is 40% of the benchmark cost.
  • For systems of capacity ranging from 3kW to 10kW, the user will be eligible for a CFA of 40% for the first 3kW capacity. The additional 20% CFA will apply to the rest of the capacity above 3kW (i.e. up to 7kW). Capacities exceeding 10kW will not receive any subsidy.
  • The GHS (Group Housing Societies) / RWA (Residential Welfare Association) are eligible for availing 20% subsidy on benchmark cost, given that certain criteria are met. A single house can have a maximum 10kWp capacity of a rooftop solar plant. The total for the entire society should not exceed 500kWp.

It is important to note that power distribution companies (DISCOMs) are responsible for implementing the solar panel subsidy scheme in Punjab and other states. To be eligible for the above subsidies, your rooftop solar system must be installed by the vendors empanelled by PSEB.

Solar Subsidy Scheme in Punjab:

The solar subsidy by Punjab is available for the state residents who wish to switch to solar electricity.

For the domestic sectors, the Punjab State Power Corporation Limited (PSPCL) will provide a maximum of 40% subsidy on benchmarked costs for installing rooftop solar power under net metering. Net metering doubles the benefits of going solar by saving you money and enabling you to earn more of it. Homeowners will first use the electricity generated through a rooftop solar system as per their requirement, and PSPCL will adjust your generated power from the total consumption. The net metering rules, however, are subject to change.

The PSPCL also notes that the solar rooftop subsidy scheme is only available for residential homeowners, registered societies, multi-story apartment buildings, and cooperative group housing societies. Non-residential sectors like educational, PSUs, private commercial, social, or industrial sectors are not eligible to benefit from the solar subsidy for homes in Punjab.

Conclusion:

Financial support for the country’s renewable sector is key to its goal for the clean energy transition. Although the current solar rooftop subsidy schemes are nearing the end of their allocation period, a new wave of support measures is likely to be . For these reasons, we can expect subsidy programs for the residential sector to continue for the foreseeable future.

Although the uptake of rooftop solar installations in residential sector has been slow, partly due to a lack of awareness about solar power and the subsidies available, the situation is expected to improve. As the state government strengthens its subsidy disbursement process, more houses will be solarized in the future.

Now is a great time to take advantage of the solar subsidy schemes for homes in Punjab. At HomeScape, we have years of expertise in installing aesthetically appealing highly durable grid-connected rooftop solar solutions customized to meet each homeowner’s needs. If you need help determining subsidized solar panel prices in Punjab for your residential space, we encourage you to book a consultation with us today.

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