Subsidies and incentives available for rooftop solar PV plants
Several incentives are available for rooftop solar PV plants. Broadly, these can be categorised as accelerated depreciation, capital subsidy and income tax credits.
Accelerated depreciation of 80 per cent was available until March 2017 under the Income Tax Act for rooftop solar PV systems, which was halved to 40 per cent from April 1, 2017 onwards. It can provide significant savings to a solar plant developer who is a taxable assesse and has sufficient profits against which the depreciation can be charged. Table II gives an illustration of tax savings from accelerated depreciation benefit.
Capital subsidy is provided in many countries for the investment made in rooftop solar power plants. Table II shows calculation for an assumed capital subsidy of 30 per cent.
Investment tax credits has a similar concept as capital subsidies. Here, instead of a direct subsidy on the capital cost, the income tax is deducted by the amount of incentive. The subsidy calculation is illustrated in Table III for an assumed income tax of 30 per cent.
Table IV shows the final cost of a rooftop PV system factoring in subsidies but without batteries. This is an estimate for commercial properties, hence includes accelerated depreciation. A similar estimation can be done for residential properties by including investment tax credits as the incentive in place of accelerated depreciation.