Residential rooftop solar grows under government scheme, but gaps persist [Commentary]

India’s rooftops are increasingly dotted with solar panels, marking a new chapter in the country’s clean energy story. The central government scheme, Pradhan Mantri Surya Ghar Muft Bijli Yojana (PMSGY), launched in February 2024, has brought residential rooftop solar into the mainstream after years of slow uptake. As of July 2025, India had installed about 11 gigawatts (GW) of residential rooftop solar capacity, of which, about half, 4.9 GW, has been added under the PMSGY. For a country that depends heavily on imported fossil fuels, the idea of turning every roof into a small power plant carries both economic and environmental value.

The scheme aims to make rooftop solar more affordable and accessible for households across India. And in its first year itself, it is clear the scheme has sparked widespread interest. However, in our recent analysis, we find that while early results are encouraging, the programme’s on-ground implementation faces several hurdles, including financing bottlenecks, supply chain gaps, limited awareness and procedural delays.

Early successes but uneven progress

Before PMSGY, rooftop solar uptake in India was largely limited to commercial and industrial consumers. For households, factors such as high upfront costs, complex processes, and low awareness acted as barriers. The government sought to change this by standardising capital incentives and simplifying procedures to bring solar energy within the reach of regular families.

Numbers reflect the scheme’s transformative impact. With a financial outlay of around $8 billion, the scheme targets 30 GW of residential rooftop solar capacity and coverage of 10 million households by 2027. In just over a year since its launch, the country has added almost 5 GW under PMSGY, accounting for nearly 45% of India’s total residential rooftop capacity and reaching 1.6 million households as of July 2025. Additionally, almost 5.8 million applications had been filed under the scheme, showing that interest in rooftop solar was no longer confined to early adopters.

It is a strong start for a sector that long struggled to find its footing. Still, the conversion rate tells another story. About a quarter, 22.7%, of applications have translated into completed installations, reflecting bottlenecks in financing, vendor capacity, and approvals. Also, with only about 13% of the target installations completed so far, the road to 10 million solar homes remains long.

Moreover, despite a strong national push, scaling up across states remains uneven. Gujarat leads the way with an installed capacity of 1,491 megawatt (MW), followed by Maharashtra, Uttar Pradesh, Kerala, and Rajasthan. Together, these five states account for more than three-fourths of the total capacity installed under PMSGY, reflecting stronger policy frameworks, a larger installer network, and greater consumer awareness. The pattern is clear: States with more mature solar ecosystems and proactive distribution companies are racing ahead, while others lag because of limited facilitation and vendor availability.

Barriers that slow down the transition

The barriers to mass adoption and the reliability needed to sustain it span multiple fronts, from consumer understanding and financing to supply logistics and procedural clarity.

For example, consumer awareness remains low. Many households still perceive rooftop solar as costly or complicated, unaware that subsidies cover a large portion of the expense and that installation has become much simpler. Limited outreach in regional languages, few demonstration projects, and dependence on vendors for information have kept awareness low. This overreliance often leads to inconsistent experiences and misinformation.

Financing gaps and loan accessibility further slow the adoption. Public sector banks offer loans at 7-8% interest, but the process is slow. Non-banking financial companies (NBFCs) provide quicker loans but at higher rates of 10-14%. For lower- and middle-income households, this trade-off between cost and speed often discourages adoption, especially where state subsidies are absent.

Procedural delay adds to the challenges. Although PMSGY mandates a 30-day approval and commissioning window, real-world timelines often extend to 45-120 days. Delays stem from meter shortages, poor coordination between vendors and distribution companies (DISCOMs), and technical bottlenecks. The long wait between applying and receiving power weakens household confidence.

Supply constraints linked to the domestic content requirement (DCR) policy also affect uptake. The DCR policy aims to boost local manufacturing, but domestic cell capacity of 25 GW lags far behind the 100+ GW module capacity. DCR-compliant modules cost ₹23-26 per watt, nearly double non-DCR imports, prompting many consumers to forgo subsidies for cheaper and faster installations.

Finally, frequent errors on the National Portal for Rooftop Solar and weak complaint tracking delay subsidies and strain trust. There’s also the issue of vendors being concentrated in a few states, causing delivery delays elsewhere. Moreover, inconsistent installation quality persists despite the Ministry of New and Renewable Energy’s certification drive.

Making the next phase work

For PMSGY to deliver on its promise, several course corrections are needed, not through new subsidies but by strengthening systems, awareness, and accountability.

States should define their own rooftop solar targets, backed by annual milestones and clear implementation timelines. Some, like Uttar Pradesh and Haryana, have already set such roadmaps, but others need to follow. Regular progress reviews and public reporting could improve transparency and encourage competition among states.

Ensuring a stable domestic supply is equally important. At least 20% of the DCR module output could be reserved specifically for PMSGY-related installations. A predictable domestic supply would stabilise prices, ensure timely deliveries, and sustain the pace of installations.

Strengthening grievance redressal mechanisms can also help. Setting up district-level grievance escalation points, along with a 24×7 helpline and real-time complaint tracking, would give consumers and vendors clear channels to resolve issues without long delays.

Local facilitation cells could further ease the process. State- and district-level facilitation teams could act as bridges between households, vendors, and DISCOMs, assisting with applications, verification, and subsidy claims. In partnership with local NGOs or panchayats, such cells could be particularly effective in semi-urban and rural areas where technical guidance is scarce.

Alongside this, focused consumer awareness drives are also essential. For millions of first-time solar users, structured awareness programmes would be a key enabler. Short community workshops, social media campaigns in regional languages, and school-level solar literacy programmes will all help normalise the idea of rooftop solar. The goal should be to make households see it not as a complex subsidy-driven project but as a practical long-term investment.

Financing also needs simplification. A dedicated task force could coordinate between banks and NBFCs to streamline loan procedures and promote affordable products. Greater outreach about financing options, simplified documentation, and digital pre-approvals could boost adoption across income groups.

The rooftop solar market remains fragmented, with wide variations in component quality. Encouraging standardised pre-assembled solar kits would simplify installation, minimise errors, and reduce costs. These plug-and-play systems could particularly benefit rural areas where technical expertise is limited.

From subsidy to sustainability

Subsidies alone cannot sustain the momentum of PMSGY. The next phase of growth will depend on simpler digital processes, faster approvals, transparent payments, and robust vendor accountability. Emerging financing models, such as pay-as-you-save (PAYS), community solar, and peer-to-peer (P2P) trading, can make adoption easier for lower-income groups and diversify participation.

Ultimately, the scheme’s success will depend on how quickly it transitions from being subsidy-driven to system-driven. If financing, supply, and procedural challenges are addressed, PMSGY can evolve into a sustainable, market-led programme that reshapes India’s residential energy landscape.

India’s rooftop solar boom is underway, but to stay the course, the focus now must shift from expansion to execution.

Gaurav Upadhyay is an Energy Finance Specialist, India Sustainable Finance at Institute for Energy Economics and Financial Analysis (IEEFA) and Prabhakar Sharma is a Senior Consultant with JMK Research and Analytics.

Banner image: Workers install a solar panel on the rooftop of a residence in Gurugram. (AP Photo/Manish Swarup).