All stakeholders in the RTS industry face various challenges that need to be addressed by any intervention that is being planned. The different market challenges faced by the stakeholders are as follows.
Consumers who wish to install RTS face issues like higher upfront cost and lack of access to finance. The majority of consumers still lack awareness about the benefits of, and the
processes involved in, installing rooftop systems. There are also consumers who do not have roof ownership or lack access to suitable roof spaces. The long roof lock-in period of 25 years is a major concern for some consumers.
For developers, the smaller size of the rooftop system, the non-uniform characteristics of rooftops, and the fragmented distribution of installations contribute to higher costs of
procurement and installation of the systems. For the same reason, access to finance for small rooftop developers becomes a challenge. Delay in approvals and other regulatory processes, the cap on solar system sizes due to limitations on transformer capacity and sanctioned load, and consumer inertia are some of the other challenges faced by developers. The collection of payments from a decentralised consumer base also presents a high transaction cost for developers.
The creditworthiness of solar developers and consumers is a major concern for financiers when it comes to RTS owing to its small and distributed nature. It also requires disproportionately high transaction costs and is an administrative hassle for banks, due to which the latter are reluctant to undertake large-scale RTS financing for the residential sector.
DISCOMs face a major risk of revenue loss because most early adopters are high-paying consumers. This also affects the crosssubsidy because the tariff collected from the high- end consumers is insufficient to cover the subsidies to the subsidised consumers and the burden eventually falls on all segments of the consumers as the overall tariff increases.
Table1: Market challenges for stakeholders
Credit: Scaling Rooftop Solar, Powering India’s Renewable Energy Transition with Households and DISCOMs, CEEW Report, June 2018