Should India Abandon Rooftop Solar Energy Subsidies And Targets Like China

Rooftop Solar India In Jeopardy?

Promoting rooftop solar energy in India has been very hard for the government despite the central government enacting numerous policies and subsidies to support the segment. The problem is the small scale and support required from a large number of stakeholders such as state regulatory commissions and utilities. Unlike large ground installations, rooftop solar energy is a distributed form of energy where ticket size is small. It is more conducive to development market and has been very successful in countries like Australia and Germany. In developing countries like India and China, rooftop solar has been very hard to promote because of the huge issues in almost every fact. The biggest issues facing rooftop solar in these countries are:

1)      Financing is difficult to get for homeowners and small businesses

2)      The rooftop is not structurally strong

3)      The rule of contract is not that strong and become a big issues in the PPA model

4)      A large part of the roof is already used for storing stuff which reduces the area for panels

5)      Electricity is subsidized for homeowners and small businesses making the economics tougher.

India and China have been very successful in subsidizing and pushing massive amounts of solar capacity through large utility scale installations. However, rooftop solar has not really taken off as there are innumerable problems due to regulators and unfriendly utilities. China has effectively abandoned a target for distributed rooftop solar energy as it has repeatedly failed to achieve them. Now it just has one solar energy target though it continues to promote rooftop solar through targeted programs.

India has a very ambitious 40 GW rooftop solar target by 2022 which implies a 40% share for distributed energy however, its success has been very limited with only 10% of the total solar installations coming from rooftop capacity. The problems are huge as net meting policies remain mostly on paper and getting subsidies and loans is extremely tough. Most of the success has come from government sponsored tenders while the private market has failed to take off.

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The Indian government has come out with another large 1 GW tender to install rooftop solar on government buildings. The ministry of renewable energy had asked government departments to give a list of rooftops where solar could be installed and it has got applications for around 6 GW. SECI has put out a tender to select vendors and is giving heavy subsidies of 35-90%. I don’t think this will help the sector too much and subsidies are being wasted. Instead the government should push the private sector to adopt this technology by removing financing and regulatory impediments. It should also give up its 40 GW target as it makes the overall rooftop solar sector look bad by constantly underachieving.