India’s renewable energy sector represents a significant opportunity for growth and development. However, challenges persist, including the underutilization of rooftop solar power. According to the Union Ministry of New and Renewable Energy (MNRE) data, India had installed only 6GW of Rooftop Solar (RTS) power as of October 2021, despite considerable progress in utility-scale solar.
Understanding Rooftop Solar
RTS systems generate electricity from solar panels mounted on the rooftops of residential or commercial buildings. While smaller than ground-mounted photovoltaic power stations, these systems can have significant capacities. Residential RTS systems typically feature a capacity of about 5 to 20 kilowatts (kW), while commercial installations often exceed 100 kilowatts.
India’s Rooftop Solar Scheme
This scheme aims to generate solar power by installing solar panels on the roofs of homes. Under Phase 2 of the plan, the MNRE aims to reach a final capacity of 40GW from RTS projects by 2022, as part of India’s broader goal to achieve 175GW renewable energy capacity including 100GW of solar power by 2022. However, as per a September 2021 report, lockdowns due to the pandemic slowed renewable energy installations in India, pushing the country behind its 2022 target.
Hurdles in Achieving Renewable Energy Targets
Policy Instability: A significant obstacle is inconsistent policy, particularly concerning power distribution companies. Although solar energy is becoming more appealing to several consumer segments, tightening regulations for the sector are causing concerns.
Goods and Services Tax Hikes: The Indian GST Council recently increased the GST on many solar system components from 5% to 12%, which will increase RTS’s capital cost by 4-5%.
Regulatory Framework: The RTS segment’s growth is highly dependent on regulatory frameworks. The absence or withdrawal of state-level policy support has primarily caused slow growth in the RTS segment.
Inconsistent Net and Gross Metering Rules: Inconsistent metering regulations pose significant problems. For example, new rules that exclude rooftop solar systems above 10 kilowatts (kW) from net-metering could hinder the adoption of larger installations in India.
Limited Financing: Although there is keen interest in installing grid-connected RTS with bank loans, nationalised banks rarely offer loans for RTS, leading to higher rates from private players.
Schemes for Promoting Solar Energy
Several schemes aim to promote solar energy in India. These include the KUSUM scheme for grid-connected Renewable Energy power plants and solar water pumps; the development of Ultra Mega Renewable Energy Power Parks; and the National Wind-Solar Hybrid Policy.
Other initiatives include the Atal Jyoti Yojana for the installation of solar street lighting in states with less than 50% households covered with grid power; the International Solar Alliance, an Indian initiative launched in collaboration with 121 solar resource-rich countries; the One Sun, One World, One Grid program for facilitating global cooperation in sharing renewable energy resources; the National Solar Mission as part of the National Action Plan on Climate Change; and the Suryamitra Skill Development Programme for providing skill training in handling solar installations.
The Way Forward
The RTS sector requires easy financing, unrestricted net metering, and a streamlined regulatory process. Key lenders including Public Financial Institutions could be mandated to lend to this segment. Adapting existing credit lines to meet the Indian RTS segment’s challenges could make the sector more attractive to developers.
