India's Rooftop Solar Sector - A Success Story But Challenges Remain - Opinion by Amit Kumar - ET EnergyWorld

1/19/2018 India's rooftop solar sector - A success story but challenges remain - Opinion by Amit Kumar | ET EnergyWorld
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Amit Kumar
Partner-Renewables, Pwc India
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India's rooftop solar sector - A success

story but challenges remain
India has set a path to achieve 100 GW power capacity through grid-connected solar
energy, out of which 40 GW is targeted to come through rooftop solar installations by
2022.
Jul 05, 2017, 05.39 PM IST
https://energy.economictimes.indiatimes.com/energy-speak/india-s-rooftop-solar-sector-a-success-story-but-challenges-remain/2465 1/9
India has set a path to achieve 100 GW power capacity through grid-connected solar energy,
out of which 40 GW is targeted to come through rooftop solar installations by 2022. Till date,
considerable efforts have been put in place to develop the rooftop solar photovoltaic sector in
India by the government, regulatory commissions and concerned agencies. Basic framework
now exists in the country and implementation of rooftop solar power plants has started in true
sense. However, considering the targets committed by India including in the international
forums with respect to rooftop solar photovoltaic plants, there is still huge scope for
development of the market and addressing the barriers faced by the stakeholders in the
sector.
The modular nature of solar PV systems makes them highly adaptable for use on vacant
rooftops. The benefits associated with rooftop solar PV systems are multifold. For a
developer, it includes reduced land and interconnection costs, higher tariffs due to increasing
commercial and industrial tariffs, and increased profitability. Rooftop solar PV assists
distribution companies (DISCOMs) by reducing the peak demand during daytime and
decreases transmission and distribution (T&D) losses as the power is consumed at the point
of generation. According to PwC analysis, more than 10,000 MU of electricity will be saved
as avoidance of T&D losses alone in year 2022 alone if 40 GW rooftop PV is achieved.
Further, commercial benefits in avoiding investments in transmission system are huge.
Finally and most importantly, it reduces the dependence on grid power, diesel generators and
is a long-term reliable power source for consumers.
The evolution of solar rooftops in India has witnessed a significant transformation to reach a
phase where all but one Indian state has issued net metering guidelines to promote solar
rooftops. In terms of technology, the quality of components has increased and there have
been drastic reductions in costs. In fact, SECI rooftop bids got quotations as low as INR
53,000 per kW in Gujarat, Maharashtra and Tamil Nadu and a quotation of INR 45,100 for
North-eastern special category states. The electricity tariffs under the Renewable Energy
Service Company (RESCO) mode have similarly come down to Rs 4.5 per kWh in Rajasthan
and Rs 3 per kWh in certain special category states. This comes just 7 years from the time
when utility scale plants had signed agreement at tariffs of over Rs 17 per kWh, signifying an
almost 75% reduction in tariff.
There are now around 1,000 rooftop installers in the country who have been certified as
channel partners by the Ministry of New and Renewable Energy. These players have been
classified under various categories based on their performance parameters. There are now
multiple innovative mechanisms of rooftop implementation such as projects being financed
by the Developer itself under the RESCO mode and then ownership being transferred to the
site owner after a fixed number of years. Also, large players such as Tata Power and Hero
Future Energies have established separate divisions that cater only to rooftops installation to
gain an early entry into the massive 30 billion USD market in the project development space
alone.
In order to propel the market, the Government has further instituted multiple enablers such
as a 30% capital subsidy on the system cost for systems being implemented on residential
rooftops, benefits of accelerated depreciation of 40%, encouraging financing of systems
under the priority sector and lower interest rates.
However, despite the enablers; as of September 30, 2016, India had achieved a solar rooftop
installed capacity of around 501 MW, as against the year 2022 targets of 40GW. The
capacity even till date is only around 1 GW, in comparison with utility scale installations that
in March 2017 exceeded 11 GW.
Typically, the growth of rooftop solar in a country goes through three phases. Starting with
the proof of concept phase that involves demonstrating the success of the technology, as in
Germany’s 1,000 rooftop programme that initiated the advent of rooftop solar in the country.
Second comes the market transformation phase, wherein focus is on building capacity in the
market and raising awareness about the technology. The most important role herein is of the
market facilitators, typically the Government. India is currently passing through this phase.
The final phase is the self-replication phase, wherein enablers are reduced to a minimum
and the market forces with optimized technologies itself lead to an increasing number of
installations. This is the phase that countries such as Japan and Germany are currently in.
Indian Government had instituted a decrease in CFA from 30% to 15% for solar rooftops in
August 2015. However, it was reinstated in November 2015 for residential buildings. This
strengthens the belief that the second market transformation phase is currently underway.
Recent discussions with multiple corporates have resulted in the inference that corporates
are increasingly planning to implement solar rooftops without subsidies because of the
economic advantages offered. This indicates that the initiation of the third phase is also
underway.
The need of the hour is to address issues and challenges hampering the growth of solar
rooftops across the country. As per a survey conducted in November 2016, although there
are net metering guidelines in place but because of lack of experience and maturity in the
market, participants from 12 states and 6 UT’s mentioned that their distribution licensees are
still at a stage of announcing the detailed procedures to grant connectivity to rooftop solar
plants. Further, across the states, it may take 3-4 months from the date of application to
receiving grant of connectivity even for a residential rooftop solar system. There are further
shared approvals and clearances between multiple departments such as the regulatory
commission, state nodal agencies, DISCOMs, urban local bodies, etc. which may cause
delays.
From a consumer perspective, there are complexities involved in procedures of various

departments, because of which they have to take out significant time from their day to day
activities to get the project installed, avail CFA, apply for grid connection and follow up on bill
settlement by the distribution licensee. Another major challenge is the non-availability of
skilled and trained manpower. This couples with loosely drafted rooftop leasing agreement
and sharing of roles and responsibilities between the developer and the rooftop owner.
The most promising method of implementation is currently the RESCO mode. However, as
the risk of this mode is on the developer they are not willing to implement systems under this
method with beneficiaries that do not have an impeccable rating or previous track record.
Systems under such mechanisms are hence typically installed only on big corporate houses
and not on smaller consumers. The market share of smaller consumers is what needs to be
captured here, but the decentralised nature of installation of small systems at multiple
locations does not result in significant returns for the developer and economies of scale.
In terms of distribution, there are limits on the total amount of electricity that can be injected
in the grid at one point owing to the transformer capacity at that location. This is not a
significant barrier currently but may emerge as number of installations go up. There is a
perception that the success of solar rooftops can be detrimental to the business of Discoms
in the sense that they lose out mainly on prime customers that were paying their charges in
full and on time and those that were paying higher tariffs too. Other grid related issues such
as effect on voltage control, quality of power, grid protection issues, forecasting and
scheduling issues are other factors that have to be taken care of.
It has been almost 2 years since India’s ambitious solar scale up targets were put into place.
The progress on implementation till now has been commendable. We can be confident that
the sector has gained significant momentum and attention to reach a level from where it is
very unlikely that its growth will slow down in the near future. The inflection point for solar
rooftops herein will be when the market enters the self-replicating growth phase as
mentioned above, resulting in growth at unprecedented rates with an increased focus on
solar rooftops as compared to utility scale installations. However, since the targets are steep
over a 5 year period, the main question is when this inflection point will occur.
DISCLAIMER: The views expressed are solely of the author and ETEnergyworld.com does not necessarily
subscribe to it. ETEnergyworld.com shall not be responsible for any damage caused to any person/organisation
directly or indirectly.
About Amit Kumar

Amit Kumar is currently a Partner at accounting and consultancy firm PwC India, handling the
renewable energy sector.
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Ganga Prasad Rao • 6 months ago

My sense is that entire economic dynamic around rooftop solar PV has changed due the
dramatic lowering of tariffs bidded into Commercial Solar PV Capacity auctions. Tariffs in the sub
Rs3 per Kwh range are likely to impact upon innumerable re-negotiable long-term PPAs
involving several thousand MW fossil-fired capacity. These commercial entities, as has been
suggested elsewhere, might turn stranded assets on the books of our public and private banking
and financial institutions. Roof top Solar, on the other hand, enjoying the monetary benefits of
low financing costs (albeit, impeded by the absence of a Single Window Online Tracking and
Cl t f it li t ) d t t i h th t ti l t d
https://energy.economictimes.indiatimes.com/energy-speak/india-s-rooftop-solar-sector-a-success-story-but-challenges-remain/2465
idl S h 5/9
Clearance system for its clients), and net metering, has the potential to expand rapidly. Such
expansion will, likely, shrink rents that might accrue (distant) large-scale, non-renewable, private
power suppliers on the grid. Residential rooftop solar is inherently small scale, distributed and
social. Dense installations likely shave off peak demand, particularly so if they are installed with
Storage Capacity. Residential Rooftop solar is hence inimical to the designs of rent-seeking
private producers operating under long-term, renegotiable PPAs (Thank God for PV Markets
that permit an early Monetise!). For these reasons, I suspect Roof top Solar is treated like the
'black sheep' among power sector participants. I fear that such forebodings of stranded fossil-
fired assets, and the competitive advantage that might accrue residential Roof top Solar
developers, is what is causing certain SERCs and DISCOMs -TANGEDCO for example - to turn
covertly hostile to Residential Roof top sector. Residential Roof top Solar could sure use a few
institutional friends and political heavyweights to protect its future from private marauders.
△ ▽ • Reply • Share ›
vinay • 6 months ago

Quite informative article Amit. However couple of things I would like to point out: "encouraging
financing of systems under the priority sector and lower interest rates" -- This is yet to happen.
At least for new entrepeneurs like us ,we are not able to get this for our projects. Also most of
banks are not coming up with lower intrest rates. Further matters like net metering-- still lot of
work required to be done by discoms.
Rajan Kapur • 6 months ago

Thank you for the informative article Amit. Please clarify if the quotation of Rs. 53,000/kW
received by SECI for rooftop PV in Maharashtra is pre-subsidy or post-subsidy.
Trinadh Yerra > Rajan Kapur • 6 months ago

Must be post-subsidy, else it is not worth it for the developer
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Home / Opinion / Amit Kumar

India's rooftop solar sector - A success

From a consumer perspective, there are complexities involved in procedures of various

About Amit Kumar

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Ganga Prasad Rao • 6 months ago

vinay • 6 months ago

Rajan Kapur • 6 months ago

Trinadh Yerra > Rajan Kapur • 6 months ago

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