Increasing electricity demand and rising grid tariffs for commercial and industrial (C&I) customers are driving business users to rooftop solar, which is not only cleaner and cheaper but also gives them tariff certainty for 25 years. In India, residential and agricultural users are subsidized while C&I consumers are levied an additional significant cross-subsidy surcharge leading to higher than average mains electricity tariffs. As a result, rooftop solar is an economically viable solution for C&I consumers. Also electricity costs are up to 50% of their total expenses, so cutting such costs via solar power sustainably improves their competitiveness in a big way. Favourable Government policies, technological innovations such as more cost reflective time-of-day tariffs, smart meters, high-efficiency modules and battery storage will drive the growth of this market.
Let us see what are the experts view on the same
Solar Rooftop: the best option for C&I customers
C&I customers contribute to the majority of rooftop solar installations in India. The commercial segment in the country has installed 1.9 GW of solar rooftop, while the industrial segment has added 1.5 GW, as of June 2020. 96% of the rooftop installations in Q2 2020 came from C&I consumers. Rooftop solar is the cheapest source of power today with tariff rates that are nearly 50% lower than grid tariffs in many states. The commercial tariff rates today vary from ₹8 to ₹15.
The C&I customer segment in India has realised the potential benefits of solar and this awareness has improved the adoption of solar in the sector.
One of the major incentives of choosing solar is the cost benefit due to the substantial reduction in electricity bills. Industries can reduce their dependence on grid power and choose to power their facilities with solar instead. With ‘net-metering’, excess power generated by the solar system can be exported to the grid and the customer can get credits for the units supplied to the grid. This further cuts down the electricity bills. As the life of the solar system is for 25 years, customers are also protected from any future rises in grid tariff.
C&I customers can also take advantage of tax benefits provided by the government. Under Section-32 of the Income Tax act, the consumer can benefit from accelerated depreciation of 40% every year until the asset is fully depreciated.
Radhika Choudary, Co-Founder and Director, Freyr Energy
C&I backing the rooftop solar space
The increasing electricity demand and rising grid tariffs for C&I customers have driven commercial users to rooftop solar which is not only cleaner and cheaper but provides them tariff certainty for up to 25 years.
Factors aiding rooftop installations for C&I segment Post Pandemic
Ever since the pandemic locked everyone into their homes to major initiatives has started at major companies. The first initiative is on cutting costs, while the second is to increase digitalization. Solar Power turned out to be a natural fit for the first initiative as many companies had put solar projects low on priorities before the pandemic has made it one of the top priorities since the pandemic. The increased use of digitization and working from home has given people more time which they never found before for solar projects. Both these initiatives have spearheaded the growth of rooftop solar in the C&I segment.
It is anticipated that large conglomerates are going to drive the growth in the C&I sector and MSME’s are going to catch up very soon. However, policy uncertainty is the biggest issue hampering the growth of rooftop solar in India. Discoms are fearful of losing their high paying C&I consumers and they are issuing orders and notifications to restrain net metering and power banking provisions. For the C&I segment to grow there needs to be consistency and clarity on policies for the rooftop sector. With the ideal policy support we would witness stronger adoption of rooftop solar in the C&I sector.
Animesh Damani, Managing Partner, Artha Energy Resources