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PMSY – Rooftop solar to bask in the sun

The government announced Pradhan Mantri Suryodaya Yojana (PMSY), a new rooftop solar scheme targeting 10mn households. While details are still embryonic, we assess the opportunity size/sectoral beneficiaries.

Solar panel manufacturers, power financing plays to benefit

Pradhan Mantri Suryodaya Yojana (PMSY), at scale (as and when that happens), is set to benefit manufacturers of solar panels, capital goods, structural steel pipes, and consumer durables & electrical companies as also power financing players. We estimate the total opportunity size for solar panels, based on the current announcement, to be 10GW, at total investment of ~INR 554bn.

Distribution utilities may see a hit of INR 87bn in revenue

Upon full execution, PMSY has the potential to generate surplus income for rural households after the investment pay-back period is over through sale of surplus power to the grid. For a 3kw installation, we estimate an income rise of 6.7% of the monthly average rural income, if the household does not use air conditioning units and doesn’t get any free power presently. We see a funding opportunity of INR 250bn, mainly benefiting power finance companies. Among losers, expect distribution utilities to see a hit of INR 87bn in revenue, as 4% of their sales are projected to transition to solar rooftop due to the installation of 10GW capacity.

PMSY: Top beneficiaries are Tata Power, REC, IREDA, PFC

Our top picks to benefit from PMSY are Tata Power (Accumulate, TP INR 288), REC (Buy, TP INR 582), IREDA (Not Rated), PFC (Buy, TP INR 326), KEI Industries (Accumulate, TP INR 2,700), Havells India (Accumulate, TP INR 1,480) and APL Apollo (Accumulate, TP INR 1,679)

Government’s existing rooftop solar scheme lackluster

The National Portal for Rooftop Solar (solarrooftop.gov.in) was launched by Prime Minister Narendra Modi on 30 July 2022. The portal makes it easier for residential consumers to apply for and install rooftop solar systems.

Till date, only 56,733 have benefited from the scheme, with total capacity added at 269.2MW and total subsidy of INR 3.18bn. A total of 66 DISCOMS have been onboarded to the scheme. The scheme, has not seen much progress till date.

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