The Ministry of New and Renewable Energy (MNRE) has clarified that distribution companies (DISCOMs) can utilise the balance incentive funds received under the 'Incentive to DISCOMs' component of the PM Surya Ghar: Muft Bijli Yojana for battery energy storage systems (BESS), distribution infrastructure augmentation, rooftop solar installations at DISCOM buildings, and rooftop generation monitoring initiatives.

The clarification follows representations from implementing agencies seeking guidance on the use of incentive amounts remaining after meeting the mandatory provisions specified under the scheme guidelines.

According to MNRE, after complying with the mandatory allocations prescribed under the operational guidelines, DISCOMs can utilise the remaining incentive amount for installing rooftop solar systems at their buildings, deploying BESS to facilitate rooftop solar integration and improve grid management, augmenting distribution infrastructure in areas with high rooftop solar penetration in accordance with applicable State Electricity Regulatory Commission (SERC) or Joint Electricity Regulatory Commission (JERC) regulations.

It can also utilise the fund for implementing rooftop generation monitoring initiatives, undertaking other rooftop solar implementation activities specified under the operational guidelines, and carrying out any additional activities that directly support the implementation of the PM Surya Ghar: Muft Bijli Yojana in accordance with prevailing financial rules.

The ministry has also clarified that these expenditures should not duplicate projects already being funded under existing Central or state government schemes such as the Revamped Distribution Sector Scheme (RDSS).

The latest clarification supplements the Operational Guidelines for the ‘Incentives to DISCOMs’ component, issued in July 2024, while leaving all other provisions unchanged.

Under the operational guidelines, PM Surya Ghar: Muft Bijli Yojana, approved on February 29, 2024, has a total outlay of INR 75,021 crore and aims to install rooftop solar systems in one crore households by FY 2026-27. DISCOMs serve as the State Implementation Agencies (SIAs) and are responsible for facilitating rooftop solar deployment through timely approvals, availability of net meters, inspections, commissioning, vendor management and consumer outreach.

The scheme provides performance-linked incentives to DISCOMs based on incremental rooftop solar capacity additions over their installed base. Incentives are calculated at 5 percent of the applicable benchmark cost for capacity additions exceeding 10 percent and up to 15 percent of the installed base capacity, and 10 percent for capacity additions beyond 15 percent. The incentive programme covers the first 18,000 MW of additional rooftop solar capacity installed nationally after March 31, 2019, with an overall financial outlay of INR 4,950 crore.

The guidelines also require DISCOMs to establish dedicated rooftop solar teams, allocate 10 percent of incentives (subject to a maximum of INR 1 crore) for reward and recognition of officials, and devolve at least 50 percent of incentives (up to INR 1 crore per division) to division and sub-division levels for rooftop solar implementation, consumer awareness, manpower, capacity building and grievance redressal activities.