Solar electricity tariffs in India have declined significantly in recent years, making rooftop solar (RTS) an attractive investment for commercial and industrial consumers. This has led to increased deployment of RTS systems among consumers in these categories, primarily to hedge the risk against increasing tariffs of grid electricity.
However, in the residential category, even though RTS systems are economically viable for highertariff consumption slabs, adoption has been minimal, with scale-up not growing as expected. Approximately 49 per cent of the total RTS potential in the National Capital Territory (NCT) of Delhi is in residential buildings, followed by the industrial, commercial, and government building sectors. This presents a huge market opportunity, especially with RTS systems becoming cheaper year-on-year. In addition, the rising trend of electricity tariff and a conducive policy landscape make the RTS option quite attractive. Recognising this context and the role of RTS in increasing the share of renewables in the city, the Delhi government has implemented a much-needed solar policy that focuses on RTS above 1 kW. The policy has set a target of 2 GW cumulative installed capacity by 2025 which would cover 21 per cent of the city’s peak load.
Besides including unique provisions like group and virtual net-metering, the policy also offers generation-based incentives (GBIs) for a limited period of time and mandates all government buildings with roof area greater than 500 m2 to deploy rooftop systems within five years. In addition, the policy also calls for exemptions related to various transmission, open-access, and cross-subsidy charges. Another notable feature of the policy is its emphasis on the role of electricity distribution companies (DISCOMs) in facilitating the adoption of RTS in the city. The policy requires DISCOMs to take measures to ensure smooth and streamlined net-metering connection and system integration for consumers.
At the national level too, the Ministry of New and Renewable Energy (MNRE) is implementing the Grid Connected Rooftop Solar Power Programme which is intended to encourage the DISCOMS to facilitate the faster adoption of RTS by incentivising them to increase deployment in their license area. The scheme, which is named SRISTI (Sustainable Rooftop Implementation for Solar Transfiguration of India), is being reviewed after stakeholder consultation. Once it is implemented, it will provide incentives to the DISCOMs to install incremental RTS capacity from a base year, through the INR 14,450 crore (USD 2.2 billion) earmarked for this purpose from the central financial assistance (CFA) scheme.
Despite the favourable policy environment, the rate of adoption of RTS remains very low due to several market challenges. Even though the market is becoming increasingly favourable for most consumer categories, it has yet to reach a point where RTS gains a commodity status. RTS continues to be viewed as an investment, and the falling prices of solar, the longer payback periods, and the lack of confidence in the 25-year life of RTS stand in the way of higher penetration, especially in the residential sector. There is also a supply gap in this sector created by the major solar players who target niche markets with high credit ratings, leaving out a large proportion of consumers.
The conventional rooftop business offerings are ineffective in addressing the challenges that exist in the market and hence there is a need for innovative business interventions to make RTS a viable option for all consumer segments. Indian DISCOMs could potentially play an important role in the RTS market by leveraging their close relationship with consumers and institutions, thereby maintaining their position in the market while addressing several of the challenges faced by the stakeholders.
The Council on Energy, Environment and Water (CEEW), in partnership with the Delhi electricity distribution company, BSES Yamuna Power Limited (BYPL), has developed three utility-led business models to address the existing market challenges and to create a conducive environment for DISCOMs, consumers, and developers. Thus, the main objectives of the business models are to address the market challenges faced by stakeholders, make rooftop solar a viable option to all domestic consumer categories and thereby accelerate the RTS deployment in the BYPL licence area.
Credit: Scaling Rooftop Solar, Powering India’s Renewable Energy Transition with Households and DISCOMs, CEEW Report, June 2018