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Despite Hurdles, Sheer Economics Drive Massive Rooftop Solar Growth In India

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Rooftop Solar Economics in India

The Indian rooftop solar market is growing at an extremely rapid pace albeit on a small base. The rooftop solar segment has grown at a 117% CAGR despite a host of issues being faced by the sector. This pace of growth is expected to continue in the future as massive potential exists and the government target of 40 GW of rooftop solar energy by 2022 remains way off the current 1.5 GW that has been installed till date.

The distribution utilities have been highly reluctant to push this technology as it directly affects their revenues. Besides, these organizations are one of the most slothful and corrupt places and any new thing is difficult for them to adapt and execute anyway. Net metering mostly exists on paper with little execution being done on the ground. Despite these teething issues, the economic case of rooftop solar has become so compelling that industrial and commercial customers are adopting rooftop solar systems in huge numbers.

Solar rooftop energy has become extremely cheap in India given that the capital cost for the rooftop solar system is one of the lowest in the world. It is possible to buy solar rooftop system at 80 cents-$1 per kilowatt for 100 kW systems, which makes it possible to sell power at INR 4.5-5 /kWh which is around 7-8 cents/kWh. This means that solar energy is cheaper than commercial and industrial tariffs in almost all the states in India by a wide margin. It is also cheaper than the high slab residential segments. Though residential customers are not switching rapidly to solar due to issues in net metering, availability of rooftops and getting approvals from the distribution utilities, industrial customers face much lesser problems.

Industrial customers have large rooftop areas and also have a substantial demand of power on their own. So even if the distribution utilities do not give them net metering connections, they can consume most of their power on their own. Also, these consumers can get cheap financing, if not, a PPA signed by many sellers in the very competitive rooftop solar market. It is easily possible to get up to 10-20 bids for a rooftop solar installation tender.

Average Rooftop Solar Cost in India

Source: PV Tech

Given the economics, rooftop solar is set to reach around 10-12 GW in the next 4-5 years and should continue its growth trajectory for a long time. A second bump will come when storage becomes cheaper opening up many more applications where rooftop solar plus storage can combine to displace the grid-based power.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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