PMSGY Boosts Rooftop Solar But Faces Supply, Finance Gaps
POWER & RENEWABLE ENERGY

PMSGY Boosts Rooftop Solar But Faces Supply, Finance Gaps

The ambitious Pradhan Mantri Surya Ghar Yojana (PMSGY) has significantly accelerated the growth of India’s residential rooftop solar segment, adding 4.9 GW of capacity within a year of its launch. However, a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics warns that the programme continues to face key supply and financial constraints that could slow progress toward its 2027 goals.

According to the report, as of July 2025, over 5.79 million applications have been submitted for rooftop solar installations under the scheme. This represents a nearly fourfold surge in applications between March 2024 and July 2025. Yet, only 13.1 per cent of the target of 10 million installations and 14.1 per cent of the allocated Rs 657 billion (USD 7.5 billion) in subsidies have been released so far. Given this gap, achieving the FY2027 target of 30 GW remains a considerable challenge.

Gujarat leads the nation with the highest installed residential rooftop solar capacity at 1,491 MW, followed by Maharashtra, Uttar Pradesh, Kerala and Rajasthan. Together, these five states account for nearly 77.2 per cent of the total 4,946 MW capacity installed under PMSGY as of July 2025.

“Establishing clear, time-bound rooftop solar capacity targets at the state level is essential for creating a coherent vision and ensuring effective policy execution,” said Vibhuti Garg, Director, IEEFA–South Asia and a contributing author of the report.

Jyoti Gulia, Founder of JMK Research and co-author of the study, noted that PMSGY has strengthened its policy framework to speed up adoption. “Since 2024, the programme has launched a nationwide capacity-building initiative to train over 300,000 people, helping vendors, utilities and financiers upgrade their skills,” she said.

The scheme’s ‘Innovative Projects’ component provides grants covering up to 60 per cent of project costs to support pilot initiatives and new business models. Additionally, the introduction of a digital Domestic Content Requirement (DCR) ensures verified use of Indian-made materials in solar modules. States and Union Territories have also been encouraged to develop solar cities and model solar villages.

Despite this progress, barriers remain. “Low consumer awareness and limited access to finance continue to hinder rooftop solar adoption. Misconceptions about high upfront costs and maintenance persist, especially in rural areas,” said Prabhakar Sharma, Senior Consultant at JMK Research and a co-author of the report.

Before PMSGY’s launch, India’s rooftop solar capacity was concentrated mainly in commercial and industrial segments, with limited uptake in the residential sector due to high costs and low awareness. By offering capital incentives and simplified procedures, PMSGY has begun to bridge this gap—making rooftop solar both accessible and financially viable for households.

The ambitious Pradhan Mantri Surya Ghar Yojana (PMSGY) has significantly accelerated the growth of India’s residential rooftop solar segment, adding 4.9 GW of capacity within a year of its launch. However, a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics warns that the programme continues to face key supply and financial constraints that could slow progress toward its 2027 goals. According to the report, as of July 2025, over 5.79 million applications have been submitted for rooftop solar installations under the scheme. This represents a nearly fourfold surge in applications between March 2024 and July 2025. Yet, only 13.1 per cent of the target of 10 million installations and 14.1 per cent of the allocated Rs 657 billion (USD 7.5 billion) in subsidies have been released so far. Given this gap, achieving the FY2027 target of 30 GW remains a considerable challenge. Gujarat leads the nation with the highest installed residential rooftop solar capacity at 1,491 MW, followed by Maharashtra, Uttar Pradesh, Kerala and Rajasthan. Together, these five states account for nearly 77.2 per cent of the total 4,946 MW capacity installed under PMSGY as of July 2025. “Establishing clear, time-bound rooftop solar capacity targets at the state level is essential for creating a coherent vision and ensuring effective policy execution,” said Vibhuti Garg, Director, IEEFA–South Asia and a contributing author of the report. Jyoti Gulia, Founder of JMK Research and co-author of the study, noted that PMSGY has strengthened its policy framework to speed up adoption. “Since 2024, the programme has launched a nationwide capacity-building initiative to train over 300,000 people, helping vendors, utilities and financiers upgrade their skills,” she said. The scheme’s ‘Innovative Projects’ component provides grants covering up to 60 per cent of project costs to support pilot initiatives and new business models. Additionally, the introduction of a digital Domestic Content Requirement (DCR) ensures verified use of Indian-made materials in solar modules. States and Union Territories have also been encouraged to develop solar cities and model solar villages. Despite this progress, barriers remain. “Low consumer awareness and limited access to finance continue to hinder rooftop solar adoption. Misconceptions about high upfront costs and maintenance persist, especially in rural areas,” said Prabhakar Sharma, Senior Consultant at JMK Research and a co-author of the report. Before PMSGY’s launch, India’s rooftop solar capacity was concentrated mainly in commercial and industrial segments, with limited uptake in the residential sector due to high costs and low awareness. By offering capital incentives and simplified procedures, PMSGY has begun to bridge this gap—making rooftop solar both accessible and financially viable for households.

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