The untapped opportunity of rooftop solar photovoltaics in India

Reading time: 6 minutes
28 April 2015

Dr Parimita Mohanty, Director-Strategic Initiatives, The Climate Group, writes about the possibilities and the economic opportunities for rooftop photovoltaic systems in India.

Rooftop solar photovoltaics (PV) present a huge untapped opportunity in India to address the linked challenges of reducing emissions, improving access to energy and boosting economic development.

Already aware of the opportunities that lie in solar technologies, the Government of India has announced an ambitious target of increasing solar installed capacity to 100 GW by 2022, of which 40 GW would come from rooftop solar PV sector.

This will translate into an exciting opportunity for entrepreneurs and investors alike, to unlock business potential and boost the nation’s energy security and access.

But while there is a tremendous opportunity, rooftop solar PV capacity must increase by 120 times from its existing capacity over the next eight years to achieve the target – which unfortunately is an over ambitious task.

To reach 40 GW of rooftop solar PV, private investment in the sector must be promoted, and certain technical, financial, policy and regulatory, and institutional challenges must be addressed. And the right action must be taken to address these gaps.

A technical challenge

First of all, the current technical standards and regulations – including product quality, protections and safety standards – must be properly thought about. We should evaluate if grid interconnection standards for grid-connected solar rooftop PV system are good enough to support the expected and rapid increase in the sector.

Another crucial point is the readiness of the grid and the ‘up-gradation’, which means the hosting capacity of the distribution grid that is required to absorb additional capacity. We must look into how we can increase up-gradation enough to achieve India’s solar capacity goals.

Subsides are also important. Whether capital subsidy, generation-based Incentives, interest rate subvention or accelerated depreciation subsidies, we must find the most effective way for the government to provide them.

At the same time, the government should phase out traditional energy subsidies in a well-managed and predictable way that supports the industry.

Capital and policies

To address these issues, we should identify what interests of different stakeholders in rooftop solar are. For example rooftop owners, power consumers, utilities, grid operators, investors, project developers and government all have different needs.

Reaching the bold 40 GW of rooftop solar goal requires not only technical support, but also capital. So we must clarify exactly how much capital will be needed, and where it will come from. Further analysis should make clear the conditions necessary to attract this level of investment, as well as the particular issues for each investor category.

To really accelerate the adoption of rooftop solar, we must also identify how to reduce the risk of contract default, and clarify and standardize issues of legal rights to rooftops.

At the same time, policy risks must also be identified. The tax system should be made clearer, more predictable and more effective at supporting the rooftop solar industry.

Joining forces

Currently, the Nand & Jeet Khemka Foundation, Department for International Development and The Climate Group are joining forces to constitute a core group to carry out a comprehensive study to analyze the above questions and challenges.

From this collaboration, we hope to come out with possible specific recommendations for government and policymakers. These will help to rapidly scale up decentralized grid connected rooftop solar PV, up to the point where further scale up and progress to 40 GW by 2022 is self-sustaining.

The study will also aim to generate a decision-making tool for policymakers on the policy choices that need to be tailored to the conditions of each Indian state.

Taking place over five months, the study is expected to be over by June 2015. A study coalition will be formulated during the course of this project.

Besides the core group, an expert panel, extracting the expertise from world’s prestigious institutions (from more than 20 institutions) working on rooftop solar PV, will review and substantiate the recommendations.

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