In 2024, the Indian government announced a significant initiative to provide free electricity to households by facilitating the installation of rooftop solar panels. This initiative marked its first anniversary on February 13, 2025. The PMSGMBY is the world’s largest domestic rooftop solar initiative and is reshaping India’s energy landscape with the aim of supplying solar power to one crore households by March 2027.
Let’s analyse the progress of this government initiative, its impact, and how it can benefit investors.
What’s Happening?
As per the Ministry of New and Renewable Energy, the scheme has benefited 8.46 lakh households through rooftop solar installations as of January 27, 2025. Compared to pre-scheme levels, the adoption of solar energy has increased tenfold, with the monthly installation rate now reaching 70,000.
The government’s 40% subsidy on renewable energy is making solar power more affordable and accessible for users. So far, Rs 4,308.66 crore has been distributed as Central Financial Assistance (CFA) to 5.54 lakh residential consumers, with an average subsidy of Rs 77,800 per household. Around 45% of beneficiaries are now enjoying zero electricity bills, depending on their solar power generation and consumption patterns.
The installation of rooftop solar panels under the scheme has recorded a 34.28% growth compared to December 2024, with projections indicating that 20 lakh households will have installations by October 2025.
Top 5 States with the Highest Number of Beneficiary Households
The ministry has also provided data on the top five states with the highest number of households benefiting from the scheme during the specified period. These states are (as of January 27, 2025):
Gujarat and Maharashtra have emerged as the top beneficiaries, together accounting for nearly two-thirds of total installations.
Impact of PM Surya Ghar: Muft Bijli Yojana
The ‘PM Surya Ghar: Muft Bijli Yojana’ is helping the government achieve its Net Zero emissions target while offering several other benefits:
Free Electricity for Households: The government is not only encouraging citizens to adopt solar energy but also providing them with free electricity. Additionally, households can sell surplus power generated through their solar systems to DISCOMs.
Reduction in Electricity Costs for the Government: By promoting solar energy, the scheme is expected to help the government save an estimated Rs 75,000 crore annually on electricity expenses.
Expansion of India’s Solar Capacity: The initiative is projected to add approximately 30 GW of solar capacity, significantly contributing to India’s renewable energy goals.
Increased Adoption of Renewable Energy: The scheme encourages households to shift to renewable energy, fostering a more sustainable energy mix in India.
Reduction in Carbon Emissions: India aims to achieve Net Zero emissions by 2070. Rooftop solar systems are expected to cut CO2 emissions by 720 million tonnes over their 25-year lifespan.
Job Creation: The initiative is expected to generate around 17 lakh jobs across sectors such as manufacturing, logistics, supply chains, sales, installation, and operations & maintenance (O&M).
What’s in It for Investors?
The government’s increasing focus on renewable energy will create growth opportunities for Indian companies in this sector. The scheme presents investment potential across multiple industries, including:
Solar Panel and Equipment Manufacturers: Higher demand for rooftop solar installations will drive production growth.
EPC (Engineering, Procurement, and Construction) Companies: Firms involved in solar infrastructure development will benefit from increased project activity.
Banks and Financing Companies: Financial institutions offering collateral-free and low-interest loans (around 7% per annum) for residential rooftop solar installations stand to gain.
With strong government backing, policy-driven incentives, and rising consumer adoption, PM Surya Ghar: Muft Bijli Yojana offers a multi-faceted investment opportunity across industries.
What’s Next?
The PM Surya Ghar: Muft Bijli Yojana is set to revolutionise India’s renewable energy sector by making solar power accessible to millions of households. By March 2025, the government anticipates rooftop solar installations will surpass 10 lakh, doubling to 20 lakh by October 2025, reaching 40 lakh by March 2026, and ultimately achieving the ambitious target of one crore households by March 2027.
Furthermore, this initiative is expected to generate annual savings of Rs 75,000 crore in electricity costs for the government while strengthening India’s position in the global clean energy transition.
By offering subsidies, affordable financing, and promoting renewable energy adoption, the scheme will not only provide free electricity to households but also drive economic benefits through reduced carbon emissions and job creation.
*This article is for informational purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
