Will Residential Rooftop Solar Drive Growth In The Future

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Mr Ashish Khanna, President, Tata Power

Even though Residential Rooftop Solar (RRS) may be contributing very little compared to the commercial solar industry, it has seen an impressive growth this year. According to a recent report, the RRS industry grew at a healthy pace with India adding around 1,836 MW to the total power output. At the end of the current financial year, the industry notched up to an impressive growth wherein the total power generated increased by 72%. All sections of the society including residential, commercial, industrial and public sector contributed effectively to aid its growth.

Indian government’s initiatives like the National Solar Mission (NSM) aims to achieve 100
GW solar PV installed capacity by 2022, out of which 40 GW is supposed to come from
RRS.

While cost of installation has dropped by almost 80%, the rooftop solar industry is
benefiting from economies of scale. The solar power industry is also responsible in creating
employment opportunities as creating 1GW of solar power creates approximately 4,000
direct and indirect jobs.

Given the above factors one can safely assume that solar power, although not considerably,
can spur economic growth in India to meet the rising power demands and ensure
sustainability along the way.

Mr. Pinaki Bhattacharyya, CEO, AMP Energy India

Rooftop Solar is the fastest growing sub-sector in India with CAGR of 116% between 2012 & 2018 (IEEFA). It contributes about 14% to the total solar installed capacity of 34GW (as of September 2019). Of this, 70% is contributed by commercial & industrial (C&I) customers and 30% comes from a combination of government and residential consumers.

Rooftop solar can be harnessed for demand side management & helps to minimize T&D
losses due to its decentralized nature. Countries like Germany and the USA have proved
that residential solar can be scaled into a progressive market.

In India, rooftop solar has seen greater adoption from C&I customers due to high tariffs
and CSR programs of corporates; residential solar on the other hand, in spite of a 180GW
potential hasn’t been able to scale up adoption due to factors such as low residential
tariffs, availability of finance, policy uncertainty and limitation of the solar RESCO model
etc.

Another key factor that has hampered solar adoption in the residential sector is the
growth of high-rise buildings in India due to space constraints. This limits the roof space
available for solar installation. To alleviate this issue, India can adopt the community solar
garden model like in the USA that allows customers to enjoy the advantages of solar
energy without having to install their own solar energy system. Residential consumers can
subscribe to units generated by a solar plant that can be set off from their bill from the
discom. This would help in aggregating demand and tax benefits can be provided to the
subscribers to promote quick adoption.

Another opportunity could be coupling Solar with Storage which is particularly relevant as
a substitute to expensive and polluting diesel gensets.

Rooftop solar has the scope to drive India’s solar rooftop growth to steer the clean energy
transition similar to the C&I segment but its on ground success depends on various factors
such as effective net metering policy, not capping the size based on the contract demand,
support from distribution companies and easier access to low cost debt financing.

Mr. Sishir Garemella, Founder & CEO, Sunvest

With 300 million homes, residential solar in India presents a very large market size and if we look at other adjacencies that it could potentially unlock, such as storage, mobility, energy efficiency, data, we notice that residential solar can create a substantial shift in the clean energy adoption at a consumer level. However, this growth can be captured only if a few factors are managed well.

Firstly, there must be a strong process driven approach to standardize the downstream
elements such as equipment quality and last mile delivery for the end customer. We
have seen many “solar kit” players in the market. Kits are a move to standardize systems
in a market where each roof is heterogeneous. After sales service network is critical in
managing assets which are subject to performance issues if not cleaned / maintained well
regularly.

Secondly, the adoption at present, is largely driven by cash buyouts, that too in very specific demographics in the country. Consumer awareness around benefits of solar is minimal. To expand into more geographies and for adoption to work at scale, end consumer financing will be critical. Specialized lenders like Sunvest Capital understand the nuances of a residential solar projects and the consumer mindsets hence we have designed financial products which allow for a consumer to go solar with affordable and hassle free EMIs.

Lastly, from the regulations perspective, we notice that subsidy mechanism continues to
have a few frictions in disbursements. In addition to the above, if subsidy and metering
processes can be streamlined, then the market will be poised for an unprecedented growth
in the future.

Mr. Manjesh Nayak, COO, Oorjan Cleantech Private Limited

As a part of its Climate Change mitigation strategy, Government of India (GoI) has set an aggressive milestone to adopt renewable energy.

Of the ambitious solar target of 100 GW by 2022 set by Government of India, 40% is expected to be achieved from rooftop solar. With a Compounded Annual Growth Rate (CAGR) of over 110% between 2012 and 2018, the rooftop solar segment has been the fastest growing renewable sub-segment in India. However, the total achievement in this sub-segment till date is only about 10% of the rooftop solar target and has been majorly driven by the Commercial
and Industrial (C&I) segment (comprising 70% of the growth). The Government and
residential segments have contributed about 15% each.

The steady but low growth in the residential rooftop solar segment has been due to
various reasons ranging from lack of consumer awareness and difficulties with net
metering process to lack of financing options and delayed subsidy disbursal. However,
the residential solar market is showing early signs of take-off. The consumers are
increasingly more informed about technology, hardware quality, economics, rooftop
policies and incentives. The continuing decline in the cost of solar power due to increased

competition and reduced hardware cost has made solar affordable to residential solar
adopters. Innovative financing solutions, like the Low-cost EMI product devised by
Oorjan along with its partners, is helping quicker solar adoption.

At about 40% of the global average Levelized Cost of Electricity from rooftop solar, Indian
rooftop solar cost is the lowest in the world. Further, residential rooftop solar market is
expected to grow exponentially. Historically, technology adoption by residential users
has been slow in the beginning but spurts later due to increased awareness, falling costs
and improved policies. The Indian Solar industry is eyeing an opportunity to be a global
leader in rooftop solar market and the residential sub segment would be key.

Mr. Rakesh Sharma, Advisor, HFM Solar Power Private Limited

Out of the 100 GW target set by the government, solar capacity installation has seen a growth of 17 % from 2014-2019 and is expected to reach 90% of the target capacity, adding around 65 GW till 2022.Rooftop solar has witnessed limited penetration, comprising 14 % of the total solar installation.

The inflating grid tariff and the declining tariff of solar has increased the viability of
rooftop solar. The provision for single window mechanism, clarity in detailing of metering
regulations and subsidization for both off takers and developers has come with effective
policy support. Further international financial organizations such as World Bank, ADB,
KFW and others are providing financial assistance for loans and zero down payment
options to push rooftop solar development in the country.

However, there are various issues that need to be resolved for the growth of solar
rooftop market. There is limited support from the loss making discoms because of
fear of revenue reduction. Even though 118 GW of rooftop potential in untapped; the
households lack credit facilities and financial strength which make banks and other
financing body hesitant. Even though the consumer awareness has increased over time,
it still needs to improve so that the rooftop target can be achieved. The bureaucratic
hassles and untimely subsidies are other areas that need to be looked into.

With increased government impetus and cost reduction in rooftop installation, solar
installed capacity has seen the fastest growth with CAGR of 116% from 2012-2018.
The government has imposed RPOs, provided opportunities and gave financing
support which lead to growth of the rooftop market. Further, innovative initiatives like
“uberisation” of residential solar rooftop where discoms act like aggregators for demand
and supply of power and new financing models will drive residential rooftop growth in
the future.

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