Rooftop solar installations at a four-year low in Jan-Jun
Customers have stepped back due to policy changes, financing costs and the covid-19 impact
New rooftop solar installations in India fell to a four-year low in the first half of 2020 thanks to a combination of policy changes, financing costs and the impact of the covid-19 pandemic, slowing India’s transition to a green energy regime.
According to data from renewable energy consultant Bridge to India, only 473MW of new rooftop systems were installed between January and June, as residential and industrial customers stepped back, against 1,534MW in the same period a year ago.
As of June 2020, India had installed rooftop solar capacity of 5,953MW, of which the commercial and industrial (C&I) sector accounted for 73%, and residential rooftop solutions about 804MW. The figures are far below India’s target to achieve overall rooftop solar target of 40,000MW by 2022.
Despite demand for rooftop solar power, the sector is facing formidable challenges including “hostile state policies,” said Vinay Rustagi, managing director, Bridge to India.
“One of the main difficulties is with financing; customers keen to set up a rooftop plant have to commit capital upfront. With banks not lending as easily now, this is difficult. The second is that state distribution companies (discoms) are making it difficult for commercial and industrial customers to migrate away from grid power. Discoms get a disproportionate share of their revenue from C&I customers who pay a higher tariff. Discoms are, therefore, turning negative on net metering connectivity and slowing the approval process.”
A rooftop owner generates solar power during the day for own consumption and supplies excess to the grid. When the unit isn’t operational, the consumer draws power from the grid.
Under net metering, energy from the rooftop unit is set off against energy purchased from the grid, and the difference is billed at a set tariff. This provides a financial incentive to power consumers to generate and maintain their own electricity supply, and reduces dependence on the grid.
However, this hurts discoms and many states, such as Karnataka, Tamil Nadu, Uttar Pradesh and Gujarat, with active rooftop customers have gross metering/net billing polices. Here, the consumer sells the excess to the grid at a lower rate than what he pays while purchasing. This disincentivizes customers from expanding capacity.
Net metering rules are currently set by individual states, though the Draft Electricity Amendment Bill proposed by the ministry of power this year has proposed a uniform national policy that allows net metering up to 5kW (kilowatt) of rooftop capacity and gross metering above that.
“We’re seeing lots of enquiries from clients who want to set up rooftop solar solutions,” said Animesh Damani, managing partner at Artha Energy Resources, a rooftop solar provider and consultant. “C&I customers are looking at solar more positively now because they want to cut costs. But if the gross metering rules are approved, it’ll be a death knell for the rooftop industry. Look at Karnataka; after they changed their policy from net to gross metering, very few new plants have been set up.”
Despite the slowing growth, foreign investors are keen on buying solar rooftop portfolios of large developers. Mint reported earlier this month that EverSource Capital plans to buy the entire 167MW solar rooftop portfolio of NYSE-listed Azure Power Global for around $112 million, in what may rank as the largest such deal in the distributed generation space.
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First Published:2 Oct 2020, 10:16 AM IST
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