What kind of Central/State benefits are available for Solar Power plant setup?

Solar plants can be categorized into 2 broad categories – Grid Connected and Off-Grid plants. The usual Govt. support available for an On-Grid plant is a Capital Subsidy of 30% on the project cost. This can be claimed by the Supplier/EPC Contractor (should be an MNRE accredited supplier) on behalf of the customer but the subsidy will be transferred to the beneficiaries account only.

Is there any subsidy available for Solar Power plant setup?

Capital Subsidy of 30% is applicable only for Grid Connected Non-Commercial Plants. The subsidy will not be applicable in case of sale of power.

Solar Power industry in India is gaining more and more prominence with each passing day. The domestic/off-grid industry is picking up speed too. Owing to the queries we are receiving regarding the various issues pertaining to the Solar Power Plant set up, we thought it would be a great idea to put together a bunch of questions and answer the same. We shall keep adding to the list as we keep receiving more queries. So, here are the most Frequently Asked Questions and our answers for the same. Do let us know in case you would like us to answer any more questions. Also, kindly point out any inaccuracies/mistakes that you may find here so that we can correct the same for the benefit of everyone.

We have tried our best to provide the best and most accurate information. However, inputs or responses to questions from other industry experts are encouraged and extremely appreciated.

Typical problems of an insufficient after sales service are

  • Wattage of appliances to be run on Solar
  • Monthly energy consumption from these appliances
  • Energy Backup or Days of Autonomy required
  • Roof space available for plant setup

Based on these factors, the power plant sizing can be accordingly done at your end.

I have land and some company posted that they are looking for people having land and ready to invest about Rs.10 lakhs. Can I go ahead with this investment?

It is difficult to comment much without more information about the company. However, it is advised to check the company’s track record to understand the company’s previous projects and the revenues/returns from such projects. A couple of things that you might have already understood from the info on this FAQs page is that a typical good quality Solar PV Power plant required Rs.6.5-8 Crores for setup. In line with this, the investment of Rs.10 lakhs you have been asked to make comes to around 1.5% of the total project cost which is not much. If your land also has a certain value, that can be factored into your equity contribution to the project. While we are not sure about the promise made by the company to you in terms of returns, kindly make sure that your investment has been duly considered in project equity and the associated returns. Also, it is possible that there are several other investors such as you who might be investing in the project. You might ask the company details regarding the same. Following are a few more things you can ask the company to provide:

  • Is the entire project equity funded from investors such as you? If ‘Yes’, who are the other investors? If ‘No’, what is the debt portion, where is it coming from and what is the interest rate?
  • Where is the project going to be setup?
  • Who is the power sold to and at what price is it being sold?
  • What are the yearly estimated revenues and returns?
  • When would you as an investor start making money (important as payback period is reasonably high for Solar Projects)?

As an investor, you have every right to know the answers to these questions. Kindly evaluate all scenarios and clarify all you queries before making such an investment.

What permissions/clearances are required to set up a Solar PV Plant?

A certain set of permissions need to be obtained and documents need to be submitted in order to set up a Solar PV plant. While these may vary from state-to-state, in order to get a Solar PV Project Accredited by State Government Load Dispatch Center for REC mechanism, the following are the statutory clearances and environmental clearances to be furnished:

  • Industrial Clearance
  • Land conversion (Agricultural to Non-Agricultural)
  • Environmental Clearance Certificate from Pollution Control Board
  • Contract labor license from Labor Department
  • Fire Safety certificate from Fire Department
  • Latest tax receipt from the Municipal/Gram Panchayat for the factory land.
  • Auditor compliance certificate regarding fossil fuel utilization
  • Approval from Chief Electrical Inspector
  • Clearance from Forest department

While these are the documents that generally requires for REC project accreditation, these are typically the clearances/documents required in general for a Solar PV project.

Also, all necessary approvals/agreements before start of Solar PV project construction are to be furnished as and when necessary. These include the following:

  • Land purchase
  • Power Evacuation arrangement permission letter from DISCOM
  • Confirmation of Metering Arrangement and location
  • ABT meter type, Manufacture, Model, Serial No. details for Energy Metering.
  • Copy of PPA (important as Preferential PPA projects are not eligible for REC mechanism)
  • Proposed Model and make of plant equipment
  • Undertaking for compliance with the usage of fossil fuel criteria as specified by MNRE
  • Details of Connectivity with DISCOM
  • Connectivity Diagram and Single Line Diagram of Plant
  • Details of pending court cases, Supreme Court of India, High Court or any other courts.

How Does Solar Power Work?

Solar Panels

Capture sunlight during the day and convert it into Direct Current (DC).


Receives that direct current from the panels and converts it into Alternate Current

Digital Meter

Measures your electricity use and can tell you more about your energy habits.

Power Grid

Receives any excess energy you generate and a feed-in tariff. can allow you to get a credit on your bill