The short version: 3 kW is the sweet spot for most Indian homes, and the reason is entirely about how the subsidy is structured rather than anything technical.
Here is what each size costs and receives. A 1 kW system runs roughly Rs 60,000 to Rs 70,000 and attracts Rs 30,000 in central subsidy. A 2 kW system costs around Rs 1.2 lakh to Rs 1.4 lakh and attracts Rs 60,000. A 3 kW system costs roughly Rs 1.8 lakh to Rs 2.2 lakh and attracts the maximum Rs 78,000. A 5 kW system costs around Rs 3 lakh to Rs 3.5 lakh and attracts exactly Rs 78,000, the same as the 3 kW.
Read that last line again, because it is the whole argument. The central subsidy is capacity-based and hard-capped. You receive Rs 30,000 per kW for the first two kilowatts, an extra Rs 18,000 for the third, and nothing at all beyond that. Every kilowatt above 3 kW is paid by you at full price.
Which means the effective cost per kilowatt rises sharply as you go bigger. On a 2 kW system the subsidy covers close to half the cost. On a 3 kW system it covers roughly forty per cent. On a 5 kW system it covers around a quarter. The panels are not more expensive, but your share of them is.
So when does a larger system still make sense? If your consumption genuinely justifies it. Someone running multiple air conditioners with a Rs 8,000 monthly bill will still save money with 5 kW, just with a longer payback on the unsubsidised portion. Solar remains a good investment above 3 kW, it simply stops being a spectacular one.
Sizing to your bill rather than your ambition. Divide your monthly bill by your tariff for units, divide by thirty for daily units, divide by roughly 3.6 for kW. A Rs 1,500 bill suggests around 1.5 kW. Rs 3,000 suggests 3 kW. Rs 5,000 suggests around 5 kW. These are conversation starters, not final answers, because your roof and usage pattern both matter.
Two constraints that may decide it for you regardless. Roof area, at 80 to 100 square feet per kW, means a 5 kW system wants 400 to 500 square feet of genuinely shadow-free terrace, which many homes do not have. And sanctioned load, printed on your bill, generally caps what net metering will approve.
State top-ups shift the maths. In Delhi and in Uttar Pradesh, state subsidies stack on the central amount and typically also cap around the 3 kW mark. That reinforces rather than changes the conclusion: 3 kW is where the incentives peak.
One genuine consideration for going larger. If you are likely to buy an electric vehicle or add air conditioning in the next few years, your consumption will rise and a system sized purely on today's bill will end up undersized. Solar is a twenty-five year asset. Weigh that against the subsidy cliff and decide deliberately rather than by default.
Our solar calculator sizes a system from your actual bill and shows the subsidy and payback at that size. Run it before anyone visits your roof.
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Last updated 27 July 2026 · Reviewed by the RenSetu team