The solar power segment in India has been witnessing unprecedented growth recently. As of March 2018, the total installed solar power capacity stood at 21.6 GW, of which 9.6 GW was added in 2017-18. However, this growth is mainly taking place in the utility-scale ground-mounted segment, which accounts for about 96 per cent (20.6 GW) of the total solar capacity. Meanwhile, rooftop solar capacity is at a little over 1.5 GW, of which a meagre 352.83 MW (35 per cent of the targeted capacity) was added in 2017-18. Further, roughly 40 times the present installed capacity is needed to meet the country’s ambitious solar target of 40 GW by 2022. This translates into at least 10 GW of capacity additions every year from 2018-19 to 2021-22.
There is a lag in capacity addition even when most of the states in India have comprehensive rooftop solar policies, along with net metering regulations. Net metering guidelines, which allow users to sell surplus power to electricity utilities, vary across states. The net metering mechanism was introduced to provide a boost to the entire rooftop solar segment. Consumers can utilise net metering to generate solar power and feed it into the grid, as well as to draw electricity from the grid when no solar power is generated, getting billed only for the “net” power consumed. While commercial and industrial rooftop solar projects are already economical without a net metering policy in place, for residential rooftop solar to take off, such a policy is critical as residential buildings do not consume much power during the day. Even those states that allow net metering have a cap on the amount of power that can be fed back into the grid.
As per BRIDGE TO INDIA estimates, Maharashtra is the largest rooftop solar state in India in terms of installed capacity, followed by Tamil Nadu, Rajasthan and Karnataka, while Uttar Pradesh, Punjab and Andhra Pradesh lag far behind. Notably, Uttar Pradesh and Andhra Pradesh are among the nine states that have a policy for gross metering in addition to a net metering policy. In fact, Uttar Pradesh, Delhi, Haryana, Chhattisgarh and Chandigarh have made it mandatory to have rooftop solar installations in all establishments, except residential buildings/complexes, in a bid to utilise the ample rooftop area for energy generation.
However, rooftop solar penetration in any given state is not solely dependent on the implementation of net metering and gross metering policies. Project uptake is driven by factors such as provisions for grid penetration, allowed project capacity, power injected into the grid and allowed ratio of contract demand. Most states have kept an upper cap of 1 MW on the allowed project capacity, with the exception of a few states that have no cap (Tamil Nadu and West Bengal) or a 0.5 MW cap (Uttarakhand and Chandigarh).
Further, states like Telangana and Jammu & Kashmir allow system sizes with just 50 per cent of the contracted load demand while others like Andhra Pradesh and Delhi have no such limitations. In a few states, there is another cap on the system size in terms of the power injected into the grid against the power drawn from the grid, which varies from 30 per cent, in the case of Goa and Chandigarh, to 90 per cent in Bihar and West Bengal. The allowed rooftop solar penetration at the distribution transformer level also varies from as low as 15 per cent, as in the case of Madhya Pradesh and Uttar Pradesh, among others, to as high as 80 per cent as in Karnataka.
Thus, metering guidelines and their on-ground implementation vary widely across states. A key reason behind rooftop solar being less popular in comparison to ground-mounted utility-scale solar projects is the reluctance of many state discoms to buy surplus power from commercial and industrial rooftop solar installations so as to avoid losing business. Further, due to the delays in obtaining approval for net metering connections, customers are increasingly moving to smaller systems, which are just sufficient to reduce their power bills, instead of larger systems that generate surplus power that can be injected into the grid. In addition, delays in tendering due to tenders being floated by multiple agencies and the lack of clarity on regulations drive away interested parties.
To resolve these issues, the Ministry of New and Renewable Energy (MNRE) has introduced the SRISTI (Sustainable Rooftop Implementation for Solar Transfiguration of India) scheme as part of Phase II of the rooftop solar scheme. The government has also proposed to streamline the process of rooftop solar installation by making discoms and their local offices the nodal points for the programme, and providing consumers direct access to the nodal agencies.
The scheme aims to disburse its outlay of Rs 234.5 billion in two forms – central financial assistance (CFA) for the residential sector and incentives for the discoms. The commercial, industrial, government, social and other sectors can no longer avail of the CFA subsidies as they are high-paying customers. This has an upside as consumers in this category will no longer have to rely on subsidies, which are often delayed, impacting cost economics.
The total capacity targeted to be installed by March 2022 under the scheme stands at 40,000 MW. Of this, the commercial and industrial sectors have been given the highest rooftop solar target of 20,000 MW while the government, residential, institutional and social sectors have been given targets of 5,000 MW each. While the government’s auction-based allocation and subsidy programmes will help promote rooftop solar development, large-scale adoption of these systems will be possible only if a robust regulatory and policy framework, including a remunerative net metering policy, is implemented across states.