Importance of emerging roof top sector in new tariff regime/ Insight into India’s Roof Top Market

Solar growth in India in recent years has been phenomenal. India became the 2nd largest solar power market in the world in terms of deployment after overtaking United States in the first half of 2018. The country currently has ~25 GW of installed grid connected solar capacity, and most of it comes from large scale solar projects which accounts for 87% installations, while rooftop nearly accounts for 11% installations. Although, Indian Rooftop solar sector has also shown incredible growth trajectory showing 72-113% y-o-y growth from 2016 to recent years. It is still standing with only 3 GW of installed capacity (out of 40 GW target). Although, there are challenges, the recent policy deviations stand as the biggest hurdle in front of Indian rooftop solar growth, which has increased rooftop solar project cost by 20%.

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Progressive Initiatives

Statistics show that rooftop marketing potential of the country stands up to 1,24,000 MW. And more than 30% of which can be easily covered if only 1.3% of the total household in India is made solar compatible. Understanding the benefits, Government of India has taken progressive initiatives like-

  • 30% subsidy for rooftop installation
  • Focusing on better net-metering across the states
  • Central Electricity Authority of India’s (CEA) latest plan to add about 24 GW rooftop solar capacity within 2027
  • The Union Government of India is preparing a ‘rent a roof’ policy to support rooftop solar growth
  • Government approving INR 118 bn for rooftop solar program and new projects are coming up semi-regularly within this sector to boost rooftop solar adoption

These initiatives have brought in new investment opportunities (SBI, IREDA, PNB and World Bank are setting up US$1.5 billion fund for grid connected rooftop installation). This growth trajectory promises to increase rooftop capacity addition by 49% in 2019 from the previous year. However, India is still struggling with adopting solar and the new 25% safeguard duty tariff imposed by the Government has brought uncertainty to the sector.

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The Challenges

Factoring in that the Indian banks are facing a liquidity crunch, as banks hitting the exposure limits to the power sector, increase in solar equipment cost will definitely slow down Rooftop solar growth down the road.

Additionally, there are challenges like- Net-metering doesn’t have required clarity, lack of information regarding cost and benefits of going solar, lack of clarity on policies, lack of flexible financing facility, falling rooftop solar tariff (INR 1.58/per kWh with subsidy), bureaucratic hurdles in getting Government subsidies, that are in the way of growth.

Although, there is growth, India has only installed 3 GW out of its 40 GW target. And the country has only 4 years to reach the target. Of its 3 GW capacity industrial sector accounts for most of it (1.5 GW), while residential sector has nearly 500 MW. This explains that rooftop solar growth is concentrated on large scale utility sector and commercial installations, which is inadvertently keeping the common people from the solar revolution.

Dominant solar countries like Germany and a few states in the USA like California have shown that Rooftop solar sector can be utilized to increase solar adoption rate and raise awareness, while minimizing electricity bills and reducing carbon footprint. Therefore, it is time for India to walk in those footsteps to realize rooftop solar potential of the country.

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Way Forward

Exempting Indian solar sector from safeguard duty imposition and taxes, offering easy financing options, faster delivery of subsidies, setting up a larger fund for rooftop, bringing in a uniform rooftop policy and mandating states to follow for easier evaluation, offering information through television, radio and other media platforms, will help India realize its full rooftop solar potential.

Involving common man in the fold is the fastest way to solarize the country, and rooftop solar brings that opportunity to us. It is time for India to capture this opportunity and win the country a bright future.

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