Unlocking India’s Residential Solar Potential: Insights and Perspectives – Neeraj Kuldeep, Senior Programme Lead – Renewable Council on Energy, Environment and Water (CEEW)

Key Highlights:

• Consumer awareness and economic viability drive residential solar adoption in India post-pandemic.
• Technological advancements crucial for efficient and affordable solar installations.
• Regulatory policies and incentives shape growth, while challenges like limited finance and cumbersome processes persist.

1. What factors drive the adoption of residential solar among homeowners in India, and how has the market evolved post-pandemic?

The residential rooftop solar sector is a B2C consumer segment where individual consumers make the purchase decisions. Their decision predominantly depends on two key factors – first, consumer awareness and second, the economic viability of the investment. The higher consumer awareness of government incentives, the quality of vendors and systems, discom processes, etc., leads to improved confidence in the technology. This will translate into higher organic growth in demand for rooftop solar panels. Translating the interest into actual installations requires economically attractive value propositions for consumers. Often, consumers expect the payback period to be within the range of three to five years. This also significantly boosts consumer confidence as the shorter payback period gives them increased visibility and confidence in likely economic gains.

2. What technological advancements are crucial for improving the efficiency and affordability of residential solar installations in India?

In my view, technological advancements will help overcome the various barriers hindering the adoption of rooftop solar panels among residential households. Considering the majority of Indian households (~ 95%) will require rooftop solar systems in the range of 0 – 2 kW, micro-inverters and small-sized inverters will become essential for improved system performance and affordability. Further, in the absence of due knowledge of system maintenance among households, solar modules often face extreme operating conditions such as hotspots, shadows, dust accumulation etc. Modules less susceptible to such events will be a boon for the sector.

• 3. How do regulatory policies and incentives affect the growth of residential solar projects in India, and what regulatory barriers exist?

Because of lower tariff rates for grid electricity in the residential sector, consumers are even more sensitive to economic returns on their investments in rooftop solar. Along with capital subsidies from central and state governments, regulatory incentives in the form of metering regulation also greatly impact consumers’ overall payback period. Appropriate provisions for banking of excess power, compensation under net-metering guidelines, and compensation period will ensure the desired payback period, in the range of three to five years. State regulations also become restrictive by assigning the minimum and maximum system size for rooftop solar and penetration ratios at the distribution transformer level.

4. What are the main challenges and opportunities in India’s residential solar market compared to other segments and regions?

CEEW’s recent study on rooftop solar potential in the residential sector presented more than 100 GW of economic potential for rooftop solar in India. This presents a significant opportunity, compared to only 3 GW of rooftop solar installations by households. Consumer awareness and willingness to adopt are still limited across India. Gujarat demonstrates the highest willingness to adopt at 12 per cent. However, except for the top four to five states, other states are at around 5 per cent. This has also led to market concentration in Gujarat, whereas the economic potential exists across all states. Limited access to affordable finance and the cumbersome discom process are two other significant challenges hindering the uptake of rooftop solar in India.

5. How will residential solar evolve within India’s renewable energy targets and sustainability goals, and what are the key drivers of future growth in the residential sector?

In recent times, we have witnessed an increased impetus on Distributed RE (including rooftop solar) from the government of India and states. The Ministry of New and Renewable Energy and the Ministry of Power have issued multiple orders, empowering solar consumers by addressing the regulatory asymmetry across states on net-metering eligibility, processes and paperwork needed. The PM Surya Ghar Scheme is another major push to residential rooftop solar, which aims to reach 10 million households and achieve 30 GW of rooftop solar capacity. More directed subsidy targeting small-scale deployments, will also help unlock the demand from the 100 GW of economic potential.