India’s benchmark costs for grid-connected rooftop solar installations declined by around 20% in 2020, marking the fourth consecutive annual reduction, according to a report published by The Economic Times on July 23, 2020. The revision reflected the government’s changing cost estimates for rooftop installations across different system capacities. The figures relate to the benchmark rates reported in 2020 and should not be interpreted as current installation prices.
Projects with capacities between 1 kW and 10 kW recorded a 22% reduction, bringing the reported average benchmark cost to approximately ₹42 per watt. For installations exceeding 10 kW, the benchmark rates declined by 20%. The Ministry of New and Renewable Energy (MNRE) also introduced more detailed capacity brackets for smaller systems, separating installations below 1 kW, between 1 kW and 2 kW, and between 3 kW and 10 kW. This allowed benchmark costs to reflect differences in system size rather than applying a single broad category to smaller rooftop installations.
Geographical conditions also influenced the benchmark structure. Special-category states and Union Territories, including northeastern states, Uttarakhand, Himachal Pradesh, Jammu and Kashmir, Ladakh, Andaman and Nicobar Islands, and Lakshadweep, had higher benchmark costs because of logistical and infrastructure-related challenges. The reported difference averaged approximately ₹4 to ₹5 per watt compared with other regions. Such variations recognized that installation costs can differ according to accessibility, transportation and local operating conditions.
The reductions came as India sought to accelerate rooftop solar adoption under its grid-connected rooftop solar programme. However, the sector was facing implementation challenges in 2020. Industry estimates cited in the report placed installed rooftop solar capacity below 3 GW, substantially short of the government’s then-target of 40 GW by 2022. The COVID-19 pandemic, uncertainty over demand from commercial and industrial consumers, and concerns about net-metering regulations were among the factors affecting deployment.
Benchmark costs are government reference values used in programme design and subsidy calculations where applicable. They are not necessarily the prices paid by every customer or the tariffs discovered through competitive bidding. Actual installation costs can vary with equipment selection, project scale, location, installation conditions and applicable subsidy rules. The distinction is important when comparing benchmark revisions with market prices or assessing the affordability of rooftop solar.
The 2020 revision illustrated the government’s effort to refine cost assumptions and support wider adoption of distributed solar generation. For the sector, lower benchmark rates could improve cost expectations, but sustained deployment also depends on financing access, predictable regulations, reliable implementation and consumer participation.