INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

Rooftop solar panel adoption initiatives in India

Submitted to

Prof. Sandip Chakrabarti

Submitted in partial fulfilment of the requirements of the course

PROJECT COURSE – Term 5

Submitted By

Rajkumar Singh (18053)

Vishal Choudhury (18181)

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Executive Summary
This report talks about the existing condition of rooftop solar power sector in India. We
have looked at the various policies deployed in the past few years, benchmarked it
against Germany and Japan (two countries that have achieved significantly in this
sector) and looked at the various issues faced by the players operating in the supply side
of the market in India.

The rationale for undertaking this project work was to identify the major issues that have
hampered the growth of rooftop solar projects in India. The government of India came up with
an ambitious target of installing 100GW of solar power capacity by 2022. Out of this, 60GW
was supposed to be obtained by ground mounted solar systems and the rest 40GW was
attributed to Rooftop solar panels. But, till date we have been only able to achieve roughly 4
GW of rooftop solar capacity.

In the first part of the report, we start off by discussing the energy sector of India and highlight
the fact that capturing solar power would be a crucial element to combat rising pollution and
depleting natural resources. We then discuss the current state of solar power in India.
Competition in this sector has been increasing as it seems a lucrative option for future
investments. We then narrow down our discussion to rooftop solar panels. The key stakeholders
and business models pertaining to the industry are mentioned. The importance of rooftop solar
panels is discussed in this segment.

In the second segment of the report, we have captured the various policies undertaken by the
Indian government in the past few years. This is followed by a collection of public policy
initiatives implemented in Germany and Japan. We have compared and contrasted the policies
to get an idea as to where the gaps could possibly be.

In the final section of the report, we have penned down the concerns of companies that install
and run rooftop solar power projects in India. The issues are segmented into financial, public
policy and operational categories. Insights obtained from primary and secondary research are
collectively mentioned in this part of the report.

The major findings of the research are that the prime issues concerning rooftop solar
installations from the supplier point-of-view are uncertainty in state-wise policies and approval
processes, non-enforcement of renewable purchase obligations, and withdrawal of subsidies
from the government.

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Table of Contents

The Energy sector in India ......................................................................................................... 1

Solar Power Sector in India ....................................................................................................... 2

Competitive landscape of Solar Energy................................................................................. 3

What is Rooftop Solar................................................................................................................ 4

Stakeholders ........................................................................................................................... 4

Consumers (Customers): .................................................................................................... 4

Solar Power Companies (Suppliers): ................................................................................. 4

DISCOMs: ......................................................................................................................... 4

Government: ...................................................................................................................... 4

Banks: ................................................................................................................................ 4

Business Models .................................................................................................................... 4

CAPEX Model: .................................................................................................................. 5

OPEX Model:..................................................................................................................... 5

Key terminologies .................................................................................................................. 5

Gross Metering................................................................................................................... 5

Net Metering ...................................................................................................................... 5

Feed-in-Tariff ..................................................................................................................... 5

Why is Rooftop solar important ................................................................................................. 5

No additional space requirement ....................................................................................... 5

Favorable weather conditions ............................................................................................ 6

Cost savings ....................................................................................................................... 6

Environment Friendly ........................................................................................................ 6

Lower Transmission losses ................................................................................................ 6

Indian Policies ............................................................................................................................ 7

Jawaharlal Nehru National Solar Mission ............................................................................. 7

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 Revised Targets for Solar Power Generation......................................................................... 8

Indian Procedures................................................................................................................. 10

Foreign Policies ....................................................................................................................... 10

German Rooftop Solar Policy .............................................................................................. 10

Feed-In-Tariff .................................................................................................................. 10

Low-Interest Loan ............................................................................................................ 11

Cons of FIT ...................................................................................................................... 11

Japan Rooftop Solar Policy.................................................................................................. 11

Feed-In-Tariff .................................................................................................................. 11

Tax Benefits ..................................................................................................................... 11

Land Usage ...................................................................................................................... 11

Comparison of Policies ............................................................................................................ 12

Challenges faced by Solar Power Companies ......................................................................... 12

Financial ............................................................................................................................... 12

Viability Gap Funding ..................................................................................................... 12

Requirement of Bank Collateral ...................................................................................... 12

Due diligence Process of banks ....................................................................................... 12

High Investment and Payback Periods ............................................................................ 12

Public Policy ........................................................................................................................ 13

Frequent policy changes in the past ................................................................................. 13

Inconsistent net metering policy ...................................................................................... 13

Non-enforcement of Renewable Purchase Obligations ................................................... 14

Uncertainty in the approval processes ............................................................................. 14

Cutting down subsidies for rooftop projects .................................................................... 14

Operational ........................................................................................................................... 14

Unavailability of appropriate rooftop space .................................................................... 14

Low power generation ..................................................................................................... 15

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 Maintenance and operational incompetence .................................................................... 15

Exhibits .................................................................................................................................... 16

Exhibit 1: Subsidy defined by the government for households: ...................................... 16

Exhibit 2: Incentive for DISCOMs .................................................................................. 16

References ................................................................................................................................ 17

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The Energy sector in India

India is the third-largest producer and consumer of electricity in the world. In 2018, India
produced 1547 TWh of energy. (Tripathi, 2018) As income and reliance on electric appliances
and gadgets increase, the electricity demand will surge in the future. The electricity
consumption in India is expected to increase by an annual average of 4.8% from 2018 to 2023.
This puts immense pressure on the government to come up with appropriate generation and
distribution methods to adequately meet future demand. The current power generation capacity
in India is marked at 356.1 GW. (Central Electricity Authority, 2019) Renewable power plants
currently constitute 34 percent of the total power generation capacity. While the installed
capacity stands close to 35%, the contribution in terms of electricity generation by renewable
power plants hasn’t been that high. A mere 17% of electricity generated last year was from
renewable sources. We rely on fossil fuels, primarily coal, for our energy needs. Fossil energy
contributed to 79.8% of the total energy generation. The following table shows the
consumption concerning various sectors (Central Electricity Authority, 2019):

Electricity consumption
Agriculture
18%

Industrial
Commercial
41%
8%
Traction
1%

Miscellaneous Domestic
7% 25%

Figure 1 Electricity consumption in various sectors

We observe that industry and domestic consumption spans 66% of the total consumption. In
the future, this demand needs to be appropriately met by deploying policies and technologies
that are sustainable in the long run. The government has to meet the growing demands, but at
the same time be mindful of the fact that natural resources that have to date, providing us the
crucial power are depleting day-by-day. One of the ways by which the government can and has
been tackling the problem is by supporting the captivation and conversion of renewable energy.

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Solar Power Sector in India

In 2015, the Indian Government set a target to install 175 GW of a renewable energy plant in
India by 2022. Of this, 100 GW will come from solar energy, with 60 GW from ground-
mounted plants and 40 GW from solar plants on rooftop.

The trend of capacity installed in the country since 2010 is (BMI Research, 2019):

Capacity (MW)
30000

25000

20000

15000

10000

5000

0
2010 2011 2012 2013 2014 2015 2016 2017 2018

Capacity (MW)

Figure 2 Trend of Solar Power Capacity installed

We can see that there is a big gap between the set targets and the actual installed capacity.
Indian weather and conditions are conducive for the flourishment of solar power generation
plants. As per the Ministry of New and Renewable Energy of India, “India is endowed with
vast solar energy potential. About 5,000 trillion kWh per year energy is incident over India's
land area, with most parts receiving 4-7 kWh per sq. m per day. Hence both technology routes
for the conversion of solar radiation into heat and electricity, namely, solar thermal and solar
photovoltaics, can effectively be harnessed, providing huge scalability for solar in India.”
(MNRE)

In the past few years, many companies have entered the market as the potential is enormous.
The declining cost of modules and increase in participation from major players has made the
sector more lucrative.

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Competitive landscape of Solar Energy

The energy sector is getting diverse day by day. There is a mix of large and small firms seen
in this sector. Large scale traditional players are trying to diversify into the renewable energy
market. This is primarily due to the various issues associated with conventional thermal power
generation. Small players have come up in recent years and are operating small scale projects.

Even the Transmission and Distribution Network that is composed of government-owned

companies believe that Public-private partnerships are crucial to raising the required funds to
improve power infrastructure in the country. This would also benefit by fostering private
interest in the sector.

Some of the major players operating in the sector are:

Table 1 List of major players in the solar power sector in India

Tata Power The company currently operates around 1.2GW of solar and wind capacity. These
projects are under the feed-in-tariff(FIT) mechanism of the Indian government. The
company announced in Mid-July 2019 that it is planning to enter into a partnership with
NTT Netmagic to build and 50MW solar facility in Maharashtra.
Renew Power It is the largest renewable energy IPP in India in terms of total energy generation
capacity. The company has grown exponentially and has a current renewable asset base
of over 8 GW, of which more than 5 GW is operational.
Adani Solar They are India’s largest photovoltaic cell and modules manufacturers with a capacity of
1.2GW situated in Mundhra, Gujarat. Presently, the company has completed 250MW
projects, and 400MW projects are under execution.
Vikram Solar The company supplies modules and undertakes EPC projects in India and abroad. They
have completed 1040MW+ of projects and are providing operations and maintenance
services to 650MW+ projects.
Amplus Solar Amplus owns and manages a portfolio of 600+ MWp of operational and under
construction distributed solar assets across India, with its projects spread over more
than 275 locations. It is one of the largest rooftop solar energy company.
Waaree Energies With a capacity of 1.5 GW, WAAREE is one of India’s largest Solar Photo Voltaic
Limited Module manufacturers. The company is also an Independent Power Produce and
provides EPC services, project development, rooftop solutions.

Apart from these, many players like Kotak Urja Private Limited, EMMVEE Photovoltaic
Power Private Limited, Indosolar, etc. operate in the solar power industry in India.

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These companies operate on two major types of solar PV installations. One is a roof-mounted
top, and the other is ground-mounted. Both types have their own benefits and limitations. In
this report, we will not look at rooftop mounted units and government policies related to them
and issues faced by players on the supply side.

What is Rooftop Solar

Commercial and residential rooftops that aren’t being utilized by their owners become a
potential opportunity for capturing solar power and generating electricity. Electricity-
generating solar panels are mounted on the roof of such residential or commercial buildings or
structures. The various components of such a system include photovoltaic modules, mounting
systems, cables, solar inverters, and other electrical accessories. These systems are usually
small compared to ground-mounted photovoltaic power stations with capacities in
the megawatt range. Capacities of such installation in residential domains are generally in the
range of 5 to 20 kW, whereas commercial buildings can support rooftop solar plants of
capacities over 100 kW. Usually solar power companies approach customers and install rooftop
solar PV systems on their available rooftops.

Stakeholders

Consumers (Customers): These can be residential, commercial, or industries that own

rooftops. They purchase and use solar energy systems.

Solar Power Companies (Suppliers): These provide the necessary technology,

manufacture/import, and sell energy systems to customers. In most of the cases, the project is
owned by them.

DISCOMs: They are responsible for the management of generated electricity in India. They
purchase electricity from various sources and distribute to people across the country.

Government: The government is responsible for developing policies for the propagation of

Banks: Provide loans to companies and consumers to install solar projects.

Business Models

In India, primarily two types of business models exist. One is the CAPEX model and the other
OPEX model (Moulin, 2019).

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CAPEX Model: In this business model, the customer pays for the cost of the project and has
complete ownership of the installation and future maintenance. They are free to sell their power
to DISCOMs or private players.

OPEX Model: The OPEX model is gaining popularity all across the world and is prevalent in
India. In this type of arrangement, the consumer provides a rooftop to third parties for
installation, financing, and development of the solar project. The roof is given on lease to solar
companies (suppliers) that arrange for the necessary technical know-how and finances. The
supplier and the customer sign a Power Purchase Agreement (PPA) for 15 to 25 years. The
PPA contains the clauses for reduced tariffs that the customer will have to pay to the supplier
for the electricity consumed. The owner of the project until the PPA is valid is the solar
company. After the designated amount of time, the project is handed over to the customer. This
is also known as Build Own Operate Transfer (BOOT) Model and Renewable Energy Service
Company (RESCO) model.

Key terminologies

Gross Metering: It is a kind of billing system for the energy produced by solar plants.
Electricity generated is directly sent to the grid. Local consumption does not happen in this
case.

Net Metering: This refers to a billing system in which the produced electricity is first utilized
by the consumer, and surplus electricity is sent to the grid. In case of a shortfall, energy is
drawn from the grid. A meter installed in the line operates both sides, depending on whether
electricity is sent or received.

Feed-in-Tariff: These are long term agreements that safeguard a producer of renewable
energy sources by offering services like, guaranteed grid access, cost-based purchase price,
etc. By means of guaranteed pricing, producers are sheltered from the risk associated with
production of renewable energy (Investopedia, 2019).

Why is Rooftop solar important

No additional space requirement

While some rooftop space is utilized for various purposes, a significant portion of rooftop space
remains idle on buildings. The most significant advantage of rooftop solar panels is that it helps

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to utilize this space and generates savings for the owner. Customers need not undertake
purchase of additional land for investment.

Favourable weather conditions

India spans from 8° to 37° latitude and enjoys warm weather for most parts of the year.
Western, Central, and South India have sunlight available for almost 12 months. The intensity
of sunlight is appropriate for the efficient operation of solar PV systems. Even in winters, while
the temperature drops, certain parts of the country get decent sunlight exposure.

Cost savings

One of the key advantage of the installation of rooftop solar panels is in terms of cost savings.
Energy generated is usually at a lower cost compared to the prevailing commercial or industrial
rate. These savings add up to a substantial figure in the long run.

Environment Friendly

Solar panels are one of the cleanest forms of energy generation. Compared to traditional
sources like coal, damage caused by solar panels is almost zero to the environment. The whole
world is facing a crisis of global warming and air pollution. The adoption of cleaner forms of
energy generation is of great interest many countries all across the globe. Air pollution has
emerged as a significant problem in India, and until the country relies on fossil fuel-based
energy sources, the problem can’t be tackled.

Lower Transmission losses

As the power is generated at the customer's rooftop, the losses in transmission of power from
the DISCOM to the customers will go down. A lot of electricity is lost because of the long
distance between the source of energy and consumption centre.

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Indian Policies

Jawaharlal Nehru National Solar Mission

The government launched Jawaharlal Nehru National Solar Mission (JNNSM) on 11th January
2010. The objective of JNNSM was to set 20 GW of solar power by 2022 while simultaneously
invest in R&D, set up production plants of solar PV cells, and reduce the tariff of solar power.
The weather conditions of the country also support solar power as there are 300 sunny days in
a year, and 4-7 kWh of energy can be generated per sq. m per day. (Ministry of New &
Renewable Energy, 2012)

The program had three phases for adding solar power:

Capacity Addition 2010-13 2013-17 2017-22 Total Capacity

Grid connected solar 1100 MW 8900 MW 10,000 MW 20,000 MW
power (including rooftop)
Off-Grid Solar Appliances 200 MW 800 MW 1000 MW 2000 MW

The government also launched Rooftop PV & Small Solar Power Generation Programme
(RPSSGP) alongside JNNSM in 2010 with a focus on Rooftop solar generation. It had
Generation Based Incentive (GBI) for the distribution utilities for purchasing power from
Rooftop Solar Plants. (Under Secretary to Government of India, 2010)

The challenges faced in the program during the period 2010 to 2015 were:

 DISCOMs were not implementing net metering in fear of loss of revenue, thereby
discouraging rooftop solar generation
 The high cost of solar PV cells
 Companies were more interested in large scale projects to lower their costs
 Plants were being set up in a few sunny states like Rajasthan and Gujrat. The land was
available readily. However, other states were lagging in bringing in policies to encourage
solar power
 Transmission of solar energy was also an issue as new lines had to be set up to the new
plants

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Revised Targets for Solar Power Generation

In 2015, India committed for the Intended Nationally Determined Contribution (INDC) that
the share of renewable power energy sources will be increased from 30% in 2015 to 40% in
2030. (Press Information Bureau, 2015)

To achieve the above goal, the Indian government revised the targets for JNNSM from 20 GW
to 100 GW. Of the 100 GW, 40 GW would come from rooftop solar plants and 60 GW from
Ground Mounted Solar Plants. To accomplish the target, the year-wise goals are as follows
(Joint Secretary to Government of India, 2015):

Capacity 2015- 2016- 2017- 2018- 2019- 2020- 2021- Total

(MW) 16 17 18 19 20 21 22
Rooftop 200 4800 5000 6000 7000 8000 9000 40000
Solar
Ground 1800 7200 10000 10000 10000 9500 8500 57000*
Mounted
Total 2000 12000 15000 16000 17000 17500 17500 97000
(*3743 MW commissioned up to 2014-15)

On 30th December 2015, the Government launched a new program called Grid Connected
Rooftop and Small Solar Power Plants Programme (GCRSSPPP) for setting up 4200 MW of
Rooftop Solar plants by 2019-20. (Joint Secretary to Government of India, 2015)

However, as of December 2018, 3850 MW capacity of the rooftop solar plant has been
installed.

The problems identified in the program and the reasons for low penetration in Rooftop solar
market are:

 Multiple players required for setting up a rooftop solar plant. It makes cumbersome for the
customer/house owner to coordinate with various vendors.
 Multiple stakeholders like DISCOMs, developer, seller, State Nodal Agencies, etc. are
involved, making the process of setting up of rooftop solar plant complex
 Lack of regulation and disparity between policies of Central and State government
 Lack of awareness among buyers

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On 19th February 2019, Government launched Phase 2 of the GCRSSPPP for setting up 40GW
of Rooftop Solar Plants by 2022. Learning from the issues identified in Phase 1, the DISCOMs
have been made the nodal agency for the implementation. (Deputy Sectretary to Government
of India, 2019)

The objectives of Phase 2 are:

 To promote Rooftop Solar Plants in commercial and household areas like residential
properties, Government buildings, industrial plants, commercial spaces like malls,
shopping areas, parking lots, etc.
 To make DISCOMs the leading agency for implementing Rooftop Solar Plants
 To spread awareness among people about the benefits of Rooftop Solar Plants
 To promote Make in India and increase capabilities of Indian Solar PV manufacturers

The program gives Central Financial Assistance (CFA) to households and housing societies for
setting up Rooftop Solar Plants. The subsidies are in terms of Benchmark cost or cost arrived
through tender, whichever is lower. The benchmark cost of Rooftop Solar Plants of capacity
less than 10 kW is Rs. 54 per Wp. The subsidies for individual households are (J K Jethani,
2019) mentioned in Exhibit 1.

Through this program, DISCOMs will make a group of agencies who can supply Solar Panels.
DISCOMs will test the quality of these panels and also the installation services. To become
part of the group, the manufacturers have to bid according to the financial criteria set by the
DISCOM. They also have to meet the technical standards to be eligible for the bidding. The
lowest bid will be L1, and the bidders within X% range from the L1 will become part of the
consortium. The value of X will be determined by the DISCOM.

Government DISCOMs can get 30% CFA in advance, whereas private DISCOMs will get it as
reimbursement. The house owner has to pay the net amount to the vendor after subtraction of
the subsidy amount from the final cost.

DISCOMs will also get incentives for the implementation of Rooftop Solar Plants and setting
up capacity beyond the base capacity. The incentive will be calculated based on the applicable
cost, which is the benchmark cost. The base capacity for the current financial year 2019-20 has
been calculated based on capacity installed till 31st March 2019. (Deputy Sectretary to
Government of India, 2019)

The incentive structure is mentioned in Exhibit 2.

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Indian Procedures

Following steps show the current process how Rooftop Solar Plant has to be set up.

Steps Activity Who will do it?

1 Application submission Consumer
2 Feasibility test & Approval DISCOM
3 Metering Agreement Consumer & DISCOM
4 Installation of solar panels Vendor (Supplier)
5 Inspection and meter installation DISCOM
6 Release of CFA DISCOM
7 Billing DISCOM

Foreign Policies

German Rooftop Solar Policy

Feed-In-Tariff
Starting from the year 2000, Germany used to follow the “Feed-in-Tariff” (FIT) model for
Rooftop Solar. The FIT was higher than the standard price of electricity from grid. This
encouraged households to put solar panels on their rooftops and sell electricity to others.
(Astbury, 2017)

The FIT would be reduced by a certain percentage over twenty years to encourage innovation
and cost reduction in the installation and production of rooftop solar.

Over the years, the FIT model has been removed and a market (auction) based system is being
implemented. FIT is available only for solar plants with capacity of less than 100 kW. Rooftop
solar above the capacity of 10 kW is also taxed, leading to increased generation cost of EUR
2.7 per kWh. Due to these changes, installation of rooftop solar has declined. However, the
German government hopes that installation of rooftop solar will increase again due to low cost
of PV panels and batteries. (Wirth, 2019)

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Low-Interest Loan
German banks provide low interest loan for solar and batteries installation of up to EUR 25
million per project. The payback period is also 20 years, with the first 3 years after start-up as
repayment-free period.

The loan can be taken by all entities, e.g. households, organizations, farmers, etc. (Ministry of
New and Renewable Energy, 2016)

Cons of FIT
Due to the high Feed-In-Tariff, the electricity cost in Germany increased, and it is more than
electricity cost in other European countries. This is leading companies to leave Germany as
their operational costs are increasing. (Astbury, 2017)

Japan Rooftop Solar Policy

Feed-In-Tariff
Since 2012, Japan has implemented a Feed-In-Tariff scheme for Rooftop Solar Plants. The
power companies are mandated to purchase electricity from Rooftop Solar. The rate is fixed
over a period of time. For solar plants with capacity of below 10 kW, the period is 10 years,
and for capacity above 10 kW, it is 20 years. (Davies, Lin, & Inglis, 2017)

Residential rooftop solar plants can sell only excess electricity to the power company.
However, non-residential rooftop solar has the liberty to sell entire electricity generated back
to the electric power company.

Tax Benefits
Organizations get preferential tax treatment for investing in Green Energy. For non-residential
rooftop solar plants, the generator can write-off up to 100% of solar cost. (Arias, 2018)

Land Usage
Factory Location Act has been amended to consider rooftop solar as an environmental area. In
Japan, factories have to maintain a specific area for environment (trees, shrubs, meadows, etc.)
along with the production area (working area). With this amendment, factories get incentive to
set up solar plants on rooftop. (Hahn, 2014)

Municipal institutions have been designated as one-stop authority to grant permissions.

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Comparison of Policies

Factors India Germany Japan

Lead Agency DISCOM (since Feb Power Company Municipal
2019) Authorities
Metering Net metering Net metering Combination of Net
& Gross metering
Incentives Subsidy for installation Low-interest loan; Relaxed land usage
(only for residential Delayed payment rights
areas) period

Challenges faced by Solar Power Companies

Financial

Viability Gap Funding: The government helps companies undertake solar projects by
financing using the VGF scheme. Viability Gap Funding is a method of funding where the
project owner has to provide the calculations of the funds that are required to be provided by
the government so that the project becomes viable. The government bridges the gap between
the required and available funds. But, the process of getting this funding is tedious and
bureaucratic. One has to wait 2 to 3 years to get the funding from the government. As said by
a senior employee working for a solar company, “The government’s target is good, but the
machinery is old.”

Requirement of Bank Collateral: Presently, for small players, the requirement of the banks
in terms of collateral is stringent for raising capital for such projects. This is because banks
tend to be risk-averse and are taking time to understand the profitability and thus develop
confidence in the financial viability of such projects.

Due diligence Process of banks: The due diligence required for the bank’s end is also high
for rooftop solar project loans. Banks prefer to undertake loans that have a lower transaction
cost and require lesser processing. The capability to evaluate the solar loan application is not
well developed yet for many banks, and this hinders the overall process.

High Investment and Payback Periods: From the investment and payback point of view,
potentials customers subscribing to the installation of the rooftop solar project, are skeptical.

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The investment and the payback period for such projects are high. This is discouraging when
we think from the lens of the customer. Their perception of rooftop solar projects being that it
would lock in a considerable amount of capital for an extended period. Individuals and small
industries fear that they might not be available for the lifetime of the project to yield the
benefits.

Public Policy

Frequent policy changes in the past: The long payback period, coupled with the fact that
there have been frequent changes in the policies undertaken by the government discourages
customers. Many believe that the government hasn’t taken a fixed long term stance concerning
the implementation policies and such uncertainty could affect them financially. For example,
Maharashtra State Electricity Distribution Company (MSEDCL) is seeking to shift from net
metering to gross metering. Such a move could make rooftop solar unviable for many
customers. Presently, some states like Andhra Pradesh, Karnataka, and Uttar Pradesh, provide
customers with a choice between a net-metered and a gross metered system. Such parity across
states is confusing to consumers and solar companies.

This also causes great threat to contracts signed by consumers and solar power companies. It
becomes difficult to fit new terms demanded by a policy change and accommodate contracts
that are approved for duration of 15 – 25 years.

Inconsistent net metering policy: The process of net metering was introduced to incentivize
the usage of renewable energy by making it more accessible and economical for consumers.
Net metering refers to the compensation that consumers get when they pass on the surplus
electricity to the DISCOMs. However, the implementation of this policy is inconsistent. A
report by Mercom India says, “that many states are hesitant to provide a robust environment
for rooftop solar, as DISCOMS do not want to sacrifice premium customers who pay a high
tariff.” The approval process also could be troublesome in many states. Many states like
Karnataka, Tamil Nadu, Maharashtra, and Gujarat have lengthy approval processes that last
between three to six months.

In contrast, states like Andhra Pradesh, Telangana, Delhi, and Rajasthan have a smoother
process and takes less than a month (Bajaj, 2018). In 2018, government went on to put a cap
on the net metering solar installations. In a project exceeded 1MW capacity, net metering
cannot be installed. The project owners need to take special permissions, and this increases the
time of the project.

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Non-enforcement of Renewable Purchase Obligations: To meet the ambitious targets,
various state governments came up with a mechanism that mandated certain entities to purchase
energy from renewable sources. This was termed as Renewable Purchase Obligation (RPO). A
policy like this is introduced to benefit solar power production by creation of demand.
However, the reality on the ground is far from expected. Implementation of this obligation isn’t
being checked properly by any agency. Thus, entities escape this regulation deeming the policy
rather useless.

Uncertainty in the approval processes: Many times, even the approving agencies aren’t clear
about the procedure that needs to be followed. It is often seen that what might get approved by
an officer in one state, gets questioned in another state. The rationale for certain steps in
procedures isn’t clear, and this causes ambiguity when they are extended to rooftop solar
projects.

Also, there are general statewide policies that become a hindrance in setting up rooftop solar
projects. For example, in Maharashtra, modification to any land needs approval from the
Maharashtra Industrial Development Corporation. But, there is no clarity as to if the policy is
applicable to rooftop systems. In this case, the clients are responsible for getting NOC. But,
usually the client is unaware of the process, and they want suppliers to get the MIDC NOC.
Such uncertainties affect the project duration and discourage potential customers.

Cutting down subsidies for rooftop projects: The government had been providing subsidies
for rooftop solar projects. But in the last 2 years, such subsidies have not been given. The
government expects private players to offer finances for such projects. The drawback of this
step as explained by people working in the industry is that many small players might be
affected. Their reliance on fund providers becomes high, and companies that enter the sector
with a secure financial backup might make it tough for the smaller players to survive.
Monopolization might occur if the market doesn’t have small players and driving out
competition would be detrimental for the end consumer and the solar power sector.

Operational

Unavailability of appropriate rooftop space: One of the prime reasons that inhibit the
installation of solar panels is the unavailability of proper rooftop space. Many potential
rooftops either have bad alignment or are being used as storage locations. Shadow from a
nearby building also affects the availability of solar energy over roofs and reduces
effectiveness. In a few cases, the demand is higher than the generation capability as per the

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space available at the rooftop. This discourages a few customers who want their complete need
to be fulfilled by a rooftop solar plant. (Staff Writer, 2019)

Low power generation: Many industries have a high power requirement and round the clock
operation. Some industries see a surge in their requirements at varying points in the day.
Rooftop solar plants would offer a particular output as per the solar radiation available at that
time. So, this gap between the available power and surge power also discourages certain
industries that wish to install solar power panels. (GK Today, 2017) There are doubts in the
minds of people working in industries pertaining to the technical specifications of the power
generated by rooftop solar panels. They believe that the specifications of the grid cannot be
matched by rooftop solar panels.

Maintenance and operational incompetence: Individuals and small industries that can
provide space for the installation of rooftop panels usually do not have the expertise of proper
maintenance of the equipment. This off-puts many customers as they believe improper
maintenance would lead to lower life of the components and a higher cost of operations for
them. It might be possible that many customers have to invest in developing the skills required
to undertake the maintenance of the equipment installed.

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Exhibits

Exhibit 1: Subsidy defined by the government for households:

Total Capacity Applicable Subsidy Total Subsidy
1 kW @ 40% for 1 kW = Rs. 20,000 Rs. 20,000
2 kW @ 40% for 2 kW = Rs. 40,000 Rs. 40,000
3 kW @ 40% for 3 kW = Rs. 60,000 Rs. 60,000
4 kW @ 40% for first 3 kW = Rs. 60,000 and @ 20% for Rs. 70,000
remaining 1 kW = Rs. 10,000
5 kW @ 40% for first 3 kW = Rs. 60,000 and @ 20% for Rs. 80,000
remaining 2 kW = Rs. 20,000
6 kW @ 40% for first 3 kW = Rs. 60,000 and @ 20% for Rs. 90,000
remaining 3 kW = Rs. 30,000
7 kW @ 40% for first 3 kW = Rs. 60,000 and @ 20% for Rs. 1,00,000
remaining 4 kW = Rs. 50,000
8 kW @ 40% for first 3 kW = Rs. 60,000 and @ 20% for Rs. 1,10,000
remaining 5 kW = Rs. 50,000
9 kW @ 40% for first 3 kW = Rs. 60,000 and @ 20% for Rs. 1,20,000
remaining 6 kW = Rs. 60,000
10 kW @ 40% for first 3 kW = Rs. 60,000 and @ 20% for Rs. 1,30,000
remaining 7 kW = Rs. 70,000
Above 10 kW @ 40% for first 3 kW = Rs. 60,000, @ 20% for 7 kW = Rs. 1,30,000
Rs. 20,000. No more subsidy after 10 kW

Exhibit 2: Incentive for DISCOMs

Parameter Incentive
For installing 10-15% over the base capacity 5% of the applicable cost
For installing above 15% over the base 5% of the applicable cost for capacity
capacity installed till 15% + 10% of applicable cost
for capacity installed beyond 15%

16
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