# What is “MNRE Benchmark Cost”?

“MNRE PV benchmark cost” is a reference costs used by Ministry of New and Renewable Energy, Govt of India for calculation of subsidies applicable for rooftop solar systems. The value provided by the Ministry can be both, higher or lower than actual/average cost of the rooftop solar system. The benchmark costs only sets up the maximum cap for subsidy.

If the investment cost is lower or equal benchmark cost the subsidy is calculated using the formula

(1) Subsidy = % subsidy * investment cost, if (investment cost<= benchmark cost)

If the investment cost is higher than  benchmark cost the subsidy is calculated as follows

(2) Subsidy = % subsidy * benchmark cost, if (investment cost> benchmark cost)

Example 1:  If MNRE subsidy is up to 30% of the benchmark cost. Let us assume that the benchmark cost is 45 Rs./Wp of installed capacity. So maximum value of the subsidy can be calculated from the formula:

Subsidy = 30% * 45 Rs. = 13.5 Rs./ Wp

In other words even if the real cost is 100 Rs., investor would enjoy 13.5 Rs./ Wp of subsidy. For investments which are less expensive or equal to benchmark cost, the 30% subsidy will be disbursed, for costlier investments the subsidy will be relatively smaller.

Example 2: If subsidy is 30%, benchmark cost 45 Rs./ Wp, Actual cost 40 Rs./Wp

Subsidy share = (30% * 40 Rs./Wp) = 12 Rs./Wp

Example 3: If subsidy is 30%, benchmark cost 45 Rs./ Wp, Actual cost 90 Rs./Wp

Subsidy share = (30% *  45 Rs./Wp) = 13.5 Rs./Wp

The benchmark cost provided by the Ministry for FY 2019-20 is as follows:

 Capacity Benchmark Cost (Rs/Wp) other than special category states Benchmark Cost (Rs/Wp) for Special category States Above 1 kW and up to 10 kW 54 59 Above 10 kW and up to 100 kW 48 53 Above 100 kW and up to 500 kW 45 50

*Special category states: North Eastern States, Hilly States of Uttarakhand, Himachal Pradesh, J&K and UTs of Andaman & Nicobar Island and Lakshadweep

The details regarding the subsidy/ CFA provided by the MNRE can be viewed by clicking here.

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