India has emerged as one of the leaders in the global energy transition by championing renewables. The country has “enhanced its installed renewable capacity by 2.5 times and increased installed solar capacity by more than 13 times in the last six years,” said India’s Prime Minister Narendra Modi.
Thus, India has taken huge strides towards its Nationally Determined Contributions (NDC) under the Paris Agreement, wherein it committed to achieving a 40% share of non-fossil-fuel-based sources in its installed energy capacity by the year 2030. More recently, India has announced plans for 227 GW of renewable energy capacity by 2022, up from the initial target of 175 GW.
Against the Government of India’s ambitious target of 40 GW of rooftop solar by 2022, an aggregate rooftop solar capacity of 5.953 GW has been installed in the country as of June 2020. Clearly, there is a need to accelerate the pace of rooftop solar installations.
The Ministry of New and Renewable Energy (MNRE) has implemented significant interventions such as subsidizing rooftop solar installations for the residential sector, establishing model timelines for interconnections, empowering DISCOMs as the focal agency and incentivizing them, solarization of government buildings through the Solar Energy Corporation of India (SECI), modification of metering regulations, streamlining of processes and demand aggregation support.
Most importantly, the MNRE has mobilized support from several international development partners for investment (US$1.5 billion of the concessional loan) and technical assistance. Since the launch of the World Bank concessional loan through the State Bank of India (SBI) for commercial & industrial sectors, several other development finance institutions have introduced credit lines, replicating the model and thus leveraging US$4 billion in private-sector finance.
Despite these initiatives, there are long-standing institutional, regulatory, financing, and quality challenges such as frequent policy and regulatory changes, high capital costs, low awareness, non-uniformity in approval processes across states, restriction on net metering, and additional charges by DISCOMs.
The Covid-19 pandemic has exacerbated these problems and has hit the rooftop solar segment much harder than utility-scale solar. Due to their weaker financial position, small players will obviously struggle in absorbing losses and are vulnerable to the additional operational expenses arising from the ongoing pandemic.
Discom level. DISCOMs are the fulcrum for accelerated deployment of grid-connected rooftop solar photovoltaic (GRPV) in India. However, they mostly continue to be indifferent about GRPV proliferation because of the potential loss of commercial & industrial consumer revenues. Therefore it becomes imperative to handhold DISCOMs in adopting innovative business models, preparing deployment targets, and enhancing their understanding to mitigate loss on revenues, thereby boosting GRPV deployment.
State regulators should encourage innovative ‘utility-led’ business models, which will help mitigate risks for consumers as well as developers.
Some states have introduced a net billing mechanism, wherein the entire solar generation is exported to the grid and settled by the DISCOMs at predetermined, regulated tariffs. However, due to an unattractive feed-in tariff (FIT) for gross generation, there is resistance from GRPV developers to the net billing provisions.
To balance such conflicting interests and ensure GRPV growth, the states should analyze their existing energy accounting and settlement arrangements and implement net billing with a fair FIT to procure GRPV power.
Further, until the state GRPV targets are met, allowing a net-metering arrangement for all consumer categories may benefit all stakeholders. Once the state GRPV targets are met, the states could increase the charges, to reflect their actual expenses toward integrating GRPV with the distribution grid, in the form of grid support charges—similar to the recently approved guidelines by Maharashtra Electricity Regulatory Commission.
Consumer level. Slow uptake by the MSME sector is yet another roadblock in the fast uptake of rooftop solar. MSMEs contribute only 8% of all installed rooftop solar projects, though the potential is enormous at an estimated 16 GW.
Amongst several challenges, lack of adequate financing is the significant barrier due to lenders’ perceived risks, as most MSMEs are either unrated or poorly assessed. Moreover, as their collateral is already pledged, it becomes difficult to secure financing for non-core activities such as installing rooftop solar systems.
A credit guarantee mechanism, which will cover the default of a percentage of the loan, will certainly encourage lenders.
Moreover, given the current pandemic situation, MSMEs do not view rooftop solar as a capital expenditure (CAPEX) priority in the interim period. RESCOs have not focused on this segment because of its dispersed nature, small ticket size, and the reluctance of banks to lend.
A portfolio-based approach to encourage lending to RESCOs for GRPV installations in MSMEs can foster adoption.
Furthermore, to achieve targets, rooftop solar must proliferate in the residential sector. Currently, the residential sector accounts for 14% of the total GRPV installed capacity. This can only be improved with greater awareness and renewed focus combined with leading promotional initiatives under the MNRE’s phase II program, focusing on the residential sector. Through virtual net metering and group metering scheme, consumers without roof access, resident welfare associations, townships, housing complexes, could harness this huge untapped potential.
Technical assistance. Digitization is another means to intensify the momentum of GRPV implementation. Some key interventions have already been made in this direction by States, ably supported by technical assistance programs, such as Unified Web Portal, online mapping of distribution transformers, vendor management portal, data room with aggregated sites with GRPV capacity assessment, Central Remote Monitoring framework for states; pilot and a framework for a National Online Remote Solar Data Monitoring Centre (NORS-DMC) at the National Institute of Solar Energy, etc.
Digitization will potentially reduce delays, streamline post-bid management, provide a seamless experience, automate loans and is thus considered as a way forward to empower all the stakeholders.
SUPRABHA (Sustainable Partnership for Rooftop Solar Acceleration in Bharat) is a program led by the World Bank and State Bank of India, and implemented in partnership with the Ministry of New and Renewable Energy (MNRE) to promote the establishment of rooftop solar in India
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: firstname.lastname@example.org.