Prime minister Narendra Modi’s government aims to increase India’s total grid-connected rooftop solar capacity to 40 GW by 2022. But at the current rate, only 38% of the target will be achieved, Bridge to India said.
All about that money
In several Indian states, power from solar panels is cheaper than from traditional grid sources. But households lack easy access to capital for the purchase of equipment.
Banks often ask for home-ownership documents as collateral for loans, said Bharath Jairaj, director of the energy program at World Resources Institute India, a non-profit research organization that recently surveyed 2,000 urban Indian households on their use of solar panels.
The government subsidizes up to 30% of the equipment cost for households, but “the subsidy mechanism is not transparent, plus the application and disbursal process is complex,” Bridge to India said.
Most industrial and commercial users avail the services of operational expenditure (OPEX) companies, which incur the cost of setting up and maintaining the equipment and sell the power generated from it to building owners. OPEX firms are, however, not as keen on residential users have given their low requirement levels and the small sizes of household rooftops.
Owners of the rooftop systems can also earn by supplying excess power to state-owned power distribution firms (discoms). The concept, known as “net metering,” is important for residential consumers as their panels create surplus power during the day when the households themselves are drawing less power. But many of the discoms are financially stressed, and resist net metering as it is an additional drain on their revenue.
Households also have less incentive to switch to solar panels, since a residential building’s power consumption is charged at a lower rate than that of commercial and industrial buildings. “High power tariffs are the key reason for commercial and industrial buildings to switch to rooftop solar,” Bridge to India said.