Free, subsidised electricity a barrier to adopt solar power in TN: White paper

Chennai, Oct 29 (PTI) The farmer-focused PM KUSUM-C scheme has no takers in Tamil Nadu since its introduction in 2019, while PM Surya Ghar has low uptake due to Tamil Nadu’s subsidised and free electricity

schemes, finds a white paper by Puducherry-based think tank.

The white paper, titled “Advancing Distributed, Equitable Solar Energy in Tamil Nadu”, aims to facilitate higher clean energy deployment in Tamil Nadu.

It focuses specifically on leveraging distributed solar energy (DERs), particularly rooftop solar and solar for agriculture, in Tamil Nadu.

The researchers have found out that as of July 2025, Tamil Nadu is yet to see any adoption of progress under PM KUSUM-C, or Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan scheme, Incidentally, the progress under the scheme has been low nationwide — only about 14.7 per cent of the target has been achieved as of July 2025, finds the report.

PM KUSUM-C, which was launched in March 2019 by the Union Ministry of New and Renewable Energy, aims to provide energy and water security to farmers while reducing environmental pollution.

Under the scheme, the central government offers subsidies of 30 per cent to 50 per cent for solar pumps or for the solarisation of existing grid-connected agricultural pumps.

Further, farmers can also install grid-connected solar power plants up to 2MW under the scheme on their barren/fallow land and sell electricity to local DISCOM at a tariff determined by state regulator.

According to the white paper, technically, PM KUSUM-C, is a win-win for farmers despite subsidies. If solar systems generate surplus power beyond on-farm needs, farmers could even receive direct payments by “exporting” excess power to the grid.

However, the researchers found that the biggest barrier for PM KUSUM-C in Tamil Nadu is the energy meters.

“The scheme relied on the introduction of energy meters, while farm electricity consumption is currently unmetered. This metering requirement was seen as a step toward reintroducing electricity charges for farmers, leading to strong opposition,” stated the report.

This misconceived notion has even overruled the potential “export incentives” that the scheme offered, finds the white paper.

Free electricity offered by the state is also one of the reasons why PM Surya Ghar has low uptake in Tamil Nadu, according to the white paper.

The central government scheme offers Rs 30,000 to Rs 78,000 per KW subsidy to residential households to install solar power.

“As per July, 2025 data, Tamil Nadu has received 99,244 applications, installation realisation of less than 40 per cent, covering 43,808 households, and 136.38 MW of commissioned capacity,” states the report.

Tamil Nadu’s electricity subsidy has increased from Rs 5,600 crore in 2014-15 to over Rs 16,000 crore in 2025-26, pointed out the report adding that most of this subsidy goes to domestic and agricultural users.

In Tamil Nadu, electricity subsidy includes 100 units free for all domestic and free/low tariffs for several sectors.

According to the white paper, Tamil Nadu’s power sector is an example of the “subsidy trap”, where a blend of tariff suppression, cross-subsidies, and fiscal bailouts sustains artificially low tariffs for priority groups.

“While this protects the poor and agricultural sector in the short term, the long-term impact is persistent losses for the power utility. These policies also undermine the business case for household rooftop solar, which cannot compete with highly subsidised grid tariffs,” states the report.

The white paper also pointed out that despite having a technical rooftop solar potential estimated at over 60GW — enough to meet approximately 47 per cent of its projected electricity demand by 2030-31 — Tamil Nadu has realised less than 2 per cent of this potential as of mid-2025.

Through their findings, the think tank suggests reforms such as 100 per cent subsidy under PM KUSUM-C, explicit targeting, direct benefit transfers, and dedicated rooftop solar programs for low-income households and marginal farmers as the way forward.

“This presents a unique opportunity for the state of Tamil Nadu to achieve multiple goals simultaneously, including social welfare, economic development, and environmental sustainability,” conclude the researchers.

The think tank, Auroville Consulting, which pitches for sustainable urban and industrial development policies and ecologically friendly technologies, published the white paper in collaboration with World Resources Institute India (WRI), a global research organisation. PTI JR ADB