Despite tall targets and the government’s efforts to promote uptake, the growth in the rooftop solar segment remains modest. Only 352.8 MW of rooftop solar capacity was added in 2017-18, against a revised and scaled-down target of 1,000 MW, casting doubt on the achievement of the 40 GW target by 2022. However, with a number of positive policy and technology developments taking place, the pace of installations is expected to pick up.
Some states lead the way
In March 2018, the country’s total installed rooftop solar capacity crossed the 2.5 GW mark. Among the states, Maharashtra was in the lead, with nearly 70 per cent of installations in the industrial segment. However, the state’s regulatory commission recently noted that rooftop solar plants with over 1 MW of capacity will not be permitted to avail of net metering facilities. This could be a setback for the state since it has large industrial users that have both rooftop space and energy demand that can be met from rooftop solar plants.
Tamil Nadu also has a significant installed rooftop solar capacity of over 250 MW, mainly in the industrial and commercial segments. Karnataka, which holds the third position with an installed capacity of 182 MW as of March 2018, has been promoting rooftop solar additions under the Smart Cities Programme. To speed up the approval process, the state’s regulatory commission recently clarified that rooftop solar installations below 1 MW will not have to be inspected by the electrical inspector.
Delhi is also progressing well in this space. While setting up rooftop solar has been a complicated procedure across India, Delhi has streamlined the process to provide approvals within a month. In addition, while most state discoms have opposed the loss of their consumers to rooftop solar, Delhi discoms have actively promoted this transition. Delhi has the highest rooftop capacity installations on PSU buildings at almost 60 MW. Meanwhile, the Solar City Initiative, which promotes installations for entire apartment complexes, is becoming a key driver for the uptake of rooftop solar among residential users. In fact, BSES Rajdhani Power Limited recently reported that of its 1,000 rooftop connections, 60 per cent are for residential consumers. The South Delhi Municipal Corporation has reportedly earned Rs 0.96 million through net metering in just three months and has plans to add solar PV systems on over 500 of its buildings and open drains by June 2019. Unlike most discoms, the Delhi discoms have actively supported the state’s target to generate 1 GW of solar power by 2020 and 2 GW by 2025 through rooftop solar PV. In fact, Tata Power Delhi Distribution Limited signed an MoU with GIZ to promote renewable energy in the state. Interestingly, the city’s gurdwaras have also come together to generate and consume 1 MW of solar power.
In total, around 352.8 MW of rooftop capacity was set up in 2017-18. Cleantech Solar accounted for the largest share of 16 per cent while CleanMax Solar and ReNew Power had respective market shares of 13 per cent and 10 per cent.
In the solar inverter space, the top three players constituted over half of the market, supplying around 600 MW of inverters for rooftop solar systems in the financial year 2017-18. Delta held the largest share of 28 per cent, followed by SMA (17 per cent) and Growatt (8 per cent).
The EPC contractors set up about 1,142 MW of rooftop solar capacity in 2017-18. The top five EPC contractors in terms of capacity addition were Tata Power Solar (65 MW), Fourth Partner Energy (30 MW), Sunsure (20 MW), Mahindra Susten (19 MW) and Suryaday (16 MW). About 17 per cent of the total rooftop capacity was set up by developers through self EPC.
There is a lag in capacity addition even though most Indian states have comprehensive net and gross metering regulations. This could be because these regulations vary across states and most states not only restrict the maximum capacity of rooftop systems, but also have a cap on the amount of power that can be fed back into the grid, which affects the project economics. In addition, the lack of consistent technical standards has been a major issue, especially since the Ministry of New and Renewable Energy (MNRE) discontinued its channel partner programme and not much has been done to ensure good project quality on a nation-wide scale.
While the central and state financing has helped drive down the cost of rooftop solar, there is a large subsidy disbursement backlog affecting the projects in the pipeline. Many solar power developers are thus opting to set up only utility-scale projects and are refraining from venturing into the rooftop solar market. Further, the complicated market dynamics have restricted the entry of many international players in the Indian rooftop sector, preventing the flow of international financing, the introduction of new business models and the increase in competition. The confusion around GST has also added to the developers’ woes.
Other challenges that continue to prevent the segment’s growth include high upfront costs of the technology, insufficient funding, poor enforcement of agreements, grid management, the lack of transparent data sharing, and unavailability of information. Segment outlook
The MNRE’s SRISTI (Sustainable Rooftop Implementation for Solar Transfiguration of India) scheme aims to bring discoms to the forefront of implementing rooftop programmes. Under this scheme, the MNRE will disburse its outlay of Rs 234.5 billion in two forms – central financial assistance for the residential sector and incentives for the discoms.
In addition to these efforts, innovative financing mechanisms such as solar municipal bonds can be introduced to support municipalities in assessing and setting up appropriate solar capacities in their jurisdictions. Roughly 16 times the present installed capacity is needed to meet the country’s ambitious solar target of 40 GW by 2022. This calls for over 10 GW of capacity additions every year from 2018-19 to 2021-22. Thus, the achievement of this target seems impossible without support from discoms and municipal corporations, which can drive the adoption of rooftop solar systems among their consumers.