The rooftop solar segment is set to grow because of the benefits it offers and the government’s increased focus on promoting the development of decentralised sources of energy through various rooftop programmes supported by comprehensive state-level net metering regulations. At Renewable Watch’s recent conference on “Distributed Solar in India”, industry experts highlighted the emerging opportunities in the rooftop solar space and discussed the key challenges and possible solutions. Excerpts…
Vikram Solar made a foray into the PV manufacturing space about 12 years back when even the National Solar Mission was not launched. It is not only an early mover, but with over 1 GW of module manufacturing facility near Kolkata, it is among the Tier 1 manufacturers. It exports modules to five continents. Besides, it has a significant engineering, procurement and construction (EPC) portfolio, with over 750 MW of utility scale and 200 MW of rooftop projects across India. Project sizes have surely become large. For instance, we are currently working on a 276 MW project at a single location in Andhra Pradesh.
As far as rooftops are concerned, the country has to achieve the 40 GW target by 2022. There has been significant momentum in recent years and the growth is impressive, but vis-à-vis the target, we are severely lagging in the rooftop space. The RESCO (renewable energy service company) model has gained uptake. Despite the challenges associated with the enforceability of contracts, more than 50 per cent of rooftop solar projects in India are based on the RESCO model, which is significant. An individual rooftop project’s ticket size has gone up sizeably. We are also witnessing a trend where rooftop plants are being increasingly fed at 11 kV because these are multi-megawatt projects. So the feeding points are moved up, and the bulk of this momentum is driven by industrial and commercial customers.
It has been quite some time since solar PV power tariffs have become lower than the grid tariff. Consuming power in the proximity of where it is being generated is a very big advantage as it addresses the issues of grid instability and transmission losses. In fact, it avoids the peak load situation and can be a win-win for both discoms and consumers. In a country like India, rooftop solar will be a significant enabler of the decarbonisation of the power sector. Thus, despite the challenges, we can take this segment forward.
It is important to note that the technology side has also evolved over the years. The energy density of PV modules has improved significantly. For a normal polycrystalline technology, we are already looking at 330 Wp while for monocrystalline we are definitely looking at 345-365 Wp. Five years back, the energy density of modules was 230 Wp. This implies that greater capacity is being accommodated in the same area. Better quality checks have been put in place before and after the testing of modules at the factory. The inverters have evolved considerably not only in terms of the price points but also with regard to topology, safety features, etc. making balance of system simpler. These trends of technology improvement, increase in energy density and reduction in prices are going to continue. Now the regulatory structure and related processes need to be streamlined.
Dr Anuvrat Joshi
Cleantech Solar was set up in 2014 and it installed the first set of solar power plants in 2015. Our key focus area is corporate customers. For three years, we primarily worked as an onsite solar developer. Thus, of the total 300 MW of capacity installed by us, about 200 MW is onsite and the rest is offsite. Our offsite business is only about a year old. In the onsite segment, the project sizes have substantially gone up. Some of the large onsite projects in our portfolio are of 20 MW, 15 MW, 12 MW and 10 MW. Most of these large-sized plants have come up in the last two years. Onsite projects contribute significantly in meeting the customers’ total power requirements. Offsite, on the other hand, is a growing market driven by the regulatory scenario including the open access framework in different states. We still have to deal with the government for onsite projects. However, its involvement is much less in the segment as compared to the offsite segment.
Ours is a pan-Asian company. Today, we are present in eight countries. That said, about 80 per cent of our business is in India. This is where grid parity has been achieved and in fact surpassed. About five years ago, we all went through a moment in time. For the first time, unsubsidised solar power from an onsite solar plant became commercially viable and substantially cheaper than grid power.
The one distinct trend that has emerged in the past five years is that now we have a highly commercially, viable source of power. It is like discovering that your internal combustion engine is more expensive than your electric car engine and the latter happens to have various other benefits. It is very important to understand this background when one looks at how a discom is going to react to losing its high-end consumers. Under the RESCO model, private players are absolutely trying to displace the incumbents. They are doing it with a completely commercially viable model and are trying to displace 100 years of legacy. So we should all understand the backdrop before we start saying what discoms should do or not do. Basically, anybody who has been in the lead for 100 years does not give up that position easily. Developers should not expect the discoms to participate with them unless the government finds a way to incentivise them. In Gujarat, they have practically shut down the RESCO model. So the customer itself has to invest in order to install a solar plant. One has to deal with such challenges and there are many ways around it.
Amplus Solar began as a startup in the rooftop segment in 2013. We set up our first rooftop plant in May 2014. The idea was very novel at that time. Until then, rooftop solar plants were being installed in EPC mode, which was the norm in the country. For grid-connected utility-scale plants, the power purchase agreement (PPA) model had become very popular. So when we started out, we extended the same PPA-based model to rooftop customers where we would be responsible for the financing, construction and maintenance of plants, while the energy produced would be bought by the rooftop owner. In this, the advantage for the rooftop owner was that, in a segment which they did not understand anything about, they were protected from all risks related to finance, performance, technology, etc. Moreover, the model ensured that the solar tariff was cheaper than grid power tariff. The timing was right; it was around 2014 when grid parity was achieved, especially for the industrial and commercial power users. Our first two projects were in Maharashtra, where commercial tariff was over Rs 14 per unit at the time. Currently, we have about 350 MW of solar assets, of which about 120-130 MW are rooftop assets at over 200 sites across the country. The other aspect that we have started working on is distributed generation or offsite solar to cater to clients that have the appetite for renewable energy, but not enough rooftop space. For them, we have set up open access projects in states where the policy permits it. We have two projects in Karnataka, of which one is the largest open access dedicated solar park in the country with about 175 MW of capacity. As other states open up their open access policies for solar, we are starting to head there as well. And through this we are supplying power to large customers like Honda (up to 30 MW of electricity).
Fourth Partner Energy started its journey in 2010 by acquiring a small company, which was into manufacturing of solar products. For the initial one or two years, we were manufacturing those products and slowly building up our team for taking up EPC assignments. Today, we are the second largest EPC player in India with a presence in 23 states. We have an installed base of 120 MW and our projects range from 1 kW to about 5.5 MW on a single roof. Fourth Partner has transformed from being a product development company to an EPC player. Now we are building our own portfolio as well. Recently, we have received funding from TPG, which infused $17 million into the company. This will help us grow in the developer domain. During the initial years, it was a subsidy-driven market but now it is a more sustainable market because we have reached and in fact breached the grid parity level. A TERI report published two years ago estimated the total rooftop potential in India at 350 GW. It is a huge figure. The marketable capacity they presumed is 152 GW, which is big enough. However, very little has been achieved of the 40 GW by 2022 target set by the Ministry of New and Renewable Energy.
There have been a number of government policies to drive growth in this space but several challenges have prevented the segment from achieving the desired growth rate. There are issues pertaining to net metering. For example, we have done some projects in Haryana, where we installed almost 37 plants in March 2018. But till date we have completed net metering for only 17 sites. Policies are there but implementation is weak. In government projects, of the 500 MW of capacity tendered, only about 140 MW has been sanctioned till date. Under these tenders, we have undertaken about 12.5 MW of installations across India in RESCO mode. Of the 75 sites, only seven have been net metered.
Some areas are facing challenges related to discoms. For example, in most states, capacity is capped at 1 MW per roof. There are many roofs (such as warehouses) where there is a massive opportunity to scale up these plants. Then there is a cap, which says that you cannot go beyond 80 per cent or 90 per cent or 100 per cent of your contract demand. And contract demand for all these warehouses is very low, say 50-200 kW, whereas the potential is in megawatts. All these things need to be considered for the growth of this segment.