Rooftop Solar Installations | 26 Nov 2022

Why in News?

Rooftop solar capacity installations in India fell 29% to 320 megawatt (MW) in July-September 2022, according to Mercom Research India.

What are the Findings?

• Cumulative Installations:
  • At the end of Q3 2022, cumulative rooftop solar (RTS) installations reached 8.3 GW.
  • Gujarat became the leading state with the highest rooftop solar installations, followed by Maharashtra and Rajasthan.
  • The top 10 states accounted for approximately 73% of cumulative rooftop solar installations.
• Decline in Installations:
  • During January-September, the installations at 1,165 MW were also down 11% compared with 1,310 MW in the corresponding nine-month period of 2021.
• Causes of Decline:
  • Solar installations are trending down because their costs have risen.
  • The market is struggling with supply issues because of the Approved List of Module and Manufacturers (ALMM), and installers are finding it a tough environment to operate in overall.

What is Rooftop Solar?

• About:
  • Rooftop solar is a photovoltaic system that has its electricity-generating solar panels mounted on the rooftop of a residential or commercial building or structure.
  • Rooftop mounted systems are small compared to ground-mounted photovoltaic power stations with capacities in the megawatt range.
  • Rooftop PV systems on residential buildings typically feature a capacity of about 5 to 20 kilowatts (kW), while those mounted on commercial buildings often reach 100 kilowatts or more.
• Challenges:
  • Flip-Flopping Policies:
    • Although many companies began using solar energy, flip-flopping (sudden real or apparent change of policy) policies remained a major hurdle, especially when it came to power distribution companies (discoms).
    • Industry executives point out RTS was becoming attractive for several consumer segments when discoms and state governments started tightening regulations for the sector.
      • India's Goods and Service Tax (GST) Council recently hiked the GST of many components of the solar system from 5% to 12%.
      • It will increase RTS's capital cost by 4-5%.
  • Regulatory Framework:
    • The growth of the RTS segment is highly dependent on the regulatory framework.
    • Slow growth has been primarily caused by the absence or withdrawal of state-level policy support for the RTS segment, especially for the business and industrial segment, which makes up the bulk of target consumers.
  • Inconsistent Rules on Net and Gross Metering:
    • Net metering regulations are one of the major obstacles facing the sector.
    • According to a report, Power ministry’s new rules that excludes rooftop solar systems above 10 kilowatts (kW) from net-metering would stall adoption of larger installations in India affecting the country’s rooftop solar target.
      • The new rules mandate net-metering for rooftop solar projects up to 10 kW and gross metering for systems with loads above 10 kW.
      • Net metering allows surplus power produced by RTS systems to be fed back into the grid.
      • Under the gross metering scheme, state DISCOMS compensate consumers with a fixed feed-in-tariff for the solar power supplied to the grid by the consumer.
  • Low Financing:
    • The Union Ministry of New and Renewable Energy (MNRE) has advised banks to give loans for RTS at subsidised rates. However, nationalised banks hardly offer loans to RTS.
    • Thus, many private players have come into the market that offer loans for RTS at higher rates like 10-12%.

Way Forward

• The RTS needs easy financing, unrestricted net metering, and an easy regulatory process. Public Financial Institutions and other key lenders could be mandated to lend to the segment.
• Some of the existing bank lines of credit could be adapted to meet the challenges of the Indian RTS segment, making it more attractive to developers in this area.

Source: TH