Solar installations to become costlier as new government rules come into force

NEW DELHI: The central government has amended solar power regulations, a move that is expected to increase the cost of solar installations from June 1. Under the new rules, solar projects connected through net-metering and open-access arrangements can only use domestically manufactured solar cells. The Centre said the decision is aimed at strengthening India's solar manufacturing ecosystem and reducing dependence on imports, particularly from China.

However, the new policy is expected to increase the cost of installing solar systems. It may also tighten supply and put pressure on companies that rely heavily on imported solar components.

The government has made it mandatory for solar cells used in solar panels to be sourced from approved domestic manufacturers. The rule applies to solar projects operating under net-metering arrangements, including installations under the PM Surya Ghar: Muft Bijli Yojana. Although manufacturers had sought additional time to comply with the changes, the government confirmed that the new regulation came into effect on June 1.

Industry estimates suggest that the new rule could increase solar installation costs by around Rs 3,000 per kilowatt. The increase is mainly due to the higher cost of domestically produced solar cells compared to imported ones. As a result, a commonly used 5-kilowatt residential solar system could become approximately Rs 15,000 more expensive.