Residential Rooftop Solar Installations May Increase by Around 60% By FY23-End: Report

Kochi: India’s residential rooftop solar capacity could increase by approximately 60% by the end of financial year 2022-23 as compared to the last fiscal, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analysis.

This could be due to an increase in consumer awareness and “strong government support”, which includes a new direct benefit transfer mechanism that ensures that consumers will receive subsidies easier and faster, the report said.

Indeed, increasing awareness and policy reforms will fuel the demand for rooftop solar in the residential sector, renewable energy scientists said. However, other experts said that a 60% rise might be an overestimate – because currently, the demand comes from only very few states. India’s residential rooftop installations will, therefore, increase only if the demand rises in more states over this time.

India’s solar power target

As per the recently updated Nationally Determined Contribution (NDC) that India submitted to the United Nations Framework Convention on Climate Change under the Paris Agreement of 2015, India has promised to achieve about 50% of cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. Generating more solar power – often touted as a clean and green source of power – is a critical component of this transition.

Utility-scale solar – such as large commercial parks – rules the roost when it comes to solar power in India. In Jharkhand, for instance, 3,000 megawatt (MW) out of the total deployed 4,000 MW is utility-scale. As per one estimate, India has added more than 50 gigawatts (GW) of utility-scale solar capacity as of August 2022.

The sector has attracted huge investments as well. Last month, Amazon announced that it would invest in three new solar parks in India – all utility scale – which, together, will generate around 420 MW of renewable power. On October 7, the Adani Group announced that it would invest Rs 65,000 crore in Rajasthan over the next five to seven years for several projects, including a 10,000 MW solar power plant. India’s target, as per its first NDC, was to generate 100 GW of solar power by 2022: 60GW from utility-scale and 40 GW from rooftop solar.

However, the deployment of rooftop solar, though an important component of India’s solar target, has lagged. Moreover, rooftop solar installations lean more towards industrial and commercial projects than residential solar.

Studies, such as this one, show that developing residential rooftop solar capacity while helping achieve India’s solar targets will also enable just transitions since individuals, including from vulnerable and underprivileged communities, stand to benefit from it.

A rise in residential rooftop solar installations

As earlier mentioned, India could see a huge increase – around 60% – in residential rooftop installations in the financial year 2022-23, the report said.

“The Indian residential rooftop solar segment is at the cusp of a robust growth phase,” said the report’s co-author, Vibhuti Garg, director – South Asia, IEEFA, in a press release. “From the 2 GW cumulative installed capacity (as of fiscal year 2022), the residential market will likely reach 3.2 GW by FY23.”

Currently, India’s residential rooftop solar capacity, as of March 2022, is only 2,010 MW, but this will increase to 3,214 MW in March 2023, the report said.

It links the predicted increase to consumer awareness and “strong government support”. These include a new simplified subsidy scheme introduced by the Union government in July 2022, the Central Finance Assistance scheme which will allow residential consumers to buy rooftop solar systems from any registered supplier of their choice, and a direct benefit transfer mechanism which ensures smoother subsidy disbursal because it eliminates discoms (power distribution companies) from the process.

The report also assessed “state-wise attractiveness” for rooftop solar installations and found that Gujarat, Haryana and Maharashtra are the three “most favourable” states in this regard.

“Going forward, we recommend state governments to take concerted efforts in expediting and streamlining net-metering and subsidy-related procedures,” the report recommended. “They also must reduce the intervention of state electricity distribution companies in the entire process of residential rooftop solar installation.”

‘The demand for solar rooftops have to rise in more states’

Neeraj Kuldeep, senior programme lead at the Delhi-based Council on Energy, Environment and Water (CEEW) told The Wire that increasing awareness among households about rooftop solar, along with policy reforms by the Ministry of New and Renewable Energy, will indeed fuel the demand for rooftop solar in the residential sector.

However, residential rooftop solar has not really been the priority sector for solar developers in India. That’s primarily because commercial and industrial rooftops offer greater economic viability that residential rooftop solar does not, he said.

Moreover, residential consumers also face numerous challenges in adopting rooftop solar, he added. These include tedious net-metering processes, delayed subsidy disbursal, limited access to affordable finance, lack of reliable solar developers, etc.

Incidentally, the lack of “customised financing options”, and “clear accessible objective information” is among the main challenges that residential consumers experience across five Indian cities, found a working paper by the World Resources Institute in 2018.

Increasing coverage of residential solar is a win because it will bring benefits to discoms (power distribution companies) too, Kuldeep added. Residential consumers constitute 25% of the overall electricity demand in India and “solarising” this demand will offer greater economic benefits to discoms by substituting subsidised electricity demand with rooftop solar, he said.

As per a CEEW analysis, discoms are likely to save Rs 0.22 per unit from electricity being generated from rooftop solar installations. Benefits are maximum in the residential categories and could reach up to Rs 0.75 per unit. This will also help discoms save on the cross-subsidy paid out to residential consumers, he added.

However, the projections of around 60% increase in residential rooftop solar installations from the last financial year are “on the higher side”, said a scientist who also studies the renewable energy sector.

Recent trends suggest that India may add only another 800-1,000 MW of residential rooftop installations, and that, too, only by the end of 2023, said the source who did not want to be named since they were sharing information that contradicts a report that predicts a positive growth for India on the residential rooftop installations front.

This is because the demand for residential rooftops is concentrated in only a few states, the source clarified. India must put efforts towards creating demand for rooftop solar in other states, too, and this would help accelerate deployment in the residential sector, the source added.