Efficiency Norms Eased for Rural Off-Grid Projects

Across numerous rural pockets in India where electricity has still not reached, off-grid solar projects appear as a promising alternative.

The Union Ministry of New and Renewable Energy (MNRE) has now reduced the minimum efficiency threshold for solar modules used in such off-grid solar initiatives.

This means modules with comparatively lower efficiency can now be included in the government’s Approved List of Models and Manufacturers (ALMM), a move that could significantly influence rural electrification efforts.

These off-grid solar projects primarily include small-scale applications such as solar lamps, streetlights, and fans, typically with a capacity below 200 watts peak. The decision is expected to provide relief to smaller manufacturers while potentially reducing costs and improving supply in remote areas.

However, concerns have been raised about whether this relaxation in standards might compromise quality. The MNRE issued this notification on 6th May 2025, amending its earlier order from 2nd January 2019, which had established the ALMM system to regulate approved solar module models and manufacturers.

Previously, the MNRE had set varying minimum efficiency standards for different categories of solar modules. For utility-scale or grid-connected power plants (Category 1), crystalline silicon-based modules required at least 20 per cent efficiency, while cadmium telluride (CdTe) modules needed 19 per cent.

Rooftop solar and solar pumping systems (Category 2) had slightly lower thresholds — 19.5 per cent for crystalline silicon and 18.5 per cent for CdTe. Smaller applications like solar lighting (Category 3), including lamps and streetlights, were permitted modules with 19 per cent efficiency for crystalline silicon and 18 per cent for CdTe.

A new deal

Under the new amendment, the efficiency requirement for off-grid solar modules has been uniformly reduced to 18 per cent for both crystalline silicon and CdTe technologies. This change applies specifically to smaller off-grid devices below 200W capacity, such as solar lanterns and micro solar grids, while larger systems like solar pumps and rooftop installations remain under the earlier, stricter efficiency norms.

Solar modules in India predominantly use either crystalline silicon or cadmium telluride technology.

Crystalline silicon, the more widely adopted option, comes in two forms — monocrystalline (higher efficiency, black panels) and polycrystalline (slightly less efficient but cheaper, blue panels). These panels are known for their durability and suitability to India’s climate.

On the other hand, CdTe thin-film technology, while less efficient, performs better in low-light conditions and comes at a lower cost. However, CdTe panels contain toxic elements like cadmium, requiring careful disposal to avoid environmental harm.

Commenting on the new directive to reduce efficiency standards for small solar projects, Binit Das, Programme Manager in the Renewable Energy division at Delhi-based think tank Centre for Science and Environment (CSE), stated: “By lowering the threshold to 18 per cent and creating a Distributed Renewable Energy (DRE) category, MNRE aims to include smaller module manufacturers and reduce the cost of rural solar kits. This could lead to increased installation of street lights and solar fans, thereby improving energy access in remote areas as the equipment becomes more affordable.”

This, in turn, may boost the adoption of solar streetlights and small appliances in remote areas where grid electricity remains unreliable or absent. However, critics argue that less efficient panels may require more installation space for the same energy output and could lead to quicker degradation, potentially affecting long-term reliability.

Solar expansion’s rural outreach

The MNRE’s latest amendment is specifically targeted at off-grid devices below 200W capacity and does not apply to larger solar applications like pumps or rooftop systems. According to government data, India’s off-grid solar capacity has seen substantial growth in recent years.

By 2024, the country had deployed over 1.7 million solar home lighting systems, 8.4 million solar lamps, and 944,000 solar streetlights under various off-grid initiatives. The total installed solar capacity reached 216.86 GW, a significant increase from 172.45 GW in 2016. As of April 2025, India’s cumulative solar capacity stood at 107.95 GW, with off-grid systems contributing 4.98 GW.

The Off-Grid Solar PV Applications Programme, one of MNRE’s longest-running initiatives, aims to provide solar-based solutions in areas where conventional grid electricity is either unavailable or inconsistent.

The programme covers a range of applications, including solar home lighting systems, streetlights, microgrids, pumps, lanterns and study lamps. The recent policy change is expected to further support this program by making solar products more accessible to underserved communities.

While the relaxation in efficiency norms may enhance affordability and accelerate off-grid solar adoption, questions remain about maintaining quality standards.

Some industry observers caution that without stringent enforcement, lower efficiency modules could flood the market, leading to subpar performance and increased waste. Balancing accessibility with reliability will be crucial as India continues to expand its decentralised solar infrastructure.

The government’s decision reflects a pragmatic approach to rural electrification, acknowledging the need for cost-effective solutions in hard-to-reach areas.

However, the long-term success of this policy will depend on how well quality control is maintained alongside broader distribution. If implemented effectively, the revised standards could play a pivotal role in bringing sustainable energy to India’s most remote populations, bridging the gap where traditional grid expansion remains challenging.

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