PM Surya Ghar Hits 4.9 GW, But Conversion and Finance Challenges Persist: IEEFA

Under the Pradhan Mantri Surya Ghar Yojana (PMSGY), 4,946 MW of residential rooftop solar capacity had been installed across various states and Union Territories as of July 2025, while subsidy disbursements crossed INR 9,280 crore (US$1.05 billion).

A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics noted that while PMSGY has rapidly expanded India’s residential rooftop solar segment, its long-term success hinges not only on subsidy provision but also on the institutionalisation of streamlined digital processes, standardised product solutions, and consumer-centric support systems.

Drop in Installation-to-Application Conversion Ratio

IEEFA found that before the launch of the scheme in 2024, rooftop solar adoption was largely concentrated in the commercial and industrial segments, with the residential sector lagging due to high upfront costs and limited awareness. PMSGY sought to address these barriers by offering capital incentives and simplifying procedures to make rooftop solar more financially attractive for households. 

The report found several operational and financial barriers continue to temper public interest despite the scheme’s progress. The report found that limited awareness of financing options, complex loan procedures, technical glitches in the grievance redressal system, and fragmented supply chains have slowed adoption.

As a result, its noted national installation-to-application conversion ratio under PMSGY stood at just 22.7% as of July 2025, underscoring the challenges in translating applications into actual rooftop installations. In contrast, Gujarat and Kerala achieved conversion ratios exceeding 65%, supported by a mature solar ecosystem, a strong vendor base, and high consumer awareness.

To accelerate adoption, several states have rolled out financial incentives that either complement the central subsidy or independently support consumers. Assam, Delhi, Goa, Uttar Pradesh, and Uttarakhand have introduced direct capital subsidies to offset high upfront installation costs.

Progress and Policy Initiatives

The report observed that PMSGY has received strong traction, with 57.9 lakh applications submitted as of July 2025—nearly a fourfold increase since March 2024. However, only 13.1% of the target 1 crore (10 million) installations and 14.1% of the allocated INR 65,700 crore (US$7.5 billion) in subsidies had been released by July 2025. This raises concerns about meeting the 30 GW rooftop solar target by FY2027.

Among states, Gujarat leads with 1,491 MW of installed capacity, followed by Maharashtra, Uttar Pradesh, Kerala, and Rajasthan—together accounting for 77.2% of total installations under the scheme. Arunachal Pradesh remains the only state without any residential rooftop solar installations so far.

To encourage innovation, the scheme’s “Innovative Projects” component provides grants covering up to 60% of project costs to support pilot initiatives and new business models. A digital Domestic Content Requirement has also been introduced to ensure the verified use of domestic materials in solar modules. Additionally, states and Union Territories are being encouraged to develop solar cities and model solar villages.

“However, low consumer awareness and access to finance remain significant barriers to the adoption of rooftop solar. Outdated perceptions of high upfront costs and maintenance persist, especially in rural areas,” says Prabhakar Sharma, senior consultant, JMK Research, and a co-author of this report.

Fragmented Supply Chains Cause Implementation Delays

Fragmented supply chains for key rooftop solar components, such as panels, inverters, and mounting structures, also cause implementation delays, the report highlights. In this case, the study recommends relying on increasing the conversion of applications into actual installations by state- and district-level facilitation cells. They can guide households in filing applications and claiming subsidies. It also suggests undertaking marketing campaigns and consumer outreach initiatives to educate potential adopters.

“Establishing clear, time-bound rooftop solar capacity targets at the state level is essential for creating a coherent vision and ensuring effective policy execution,” says Vibhuti Garg, Director, IEEFA - South Asia, and a contributing author. 

A grievance redressal system has been set up under PMSGY, but its effectiveness is limited. “PMSGY should establish a district-level escalation matrix so that subsidy disbursement delays, incorrect data entries or portal malfunctions can be routed beyond the DISCOM or portal level,” says Aman Gupta, research associate at JMK Research, and a co-author of this report.