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How TN Solar Policy is failing Home Solar Rooftop Systems as wrongly biased towards large scale Solar Plants and Parks

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The Solar Policy unveiled by Tamil Nadu has generated a huge amount of investor enthusiasm with a target of generating almost 3 GW of solar power in the next 3 years. The government has already come out with a TN solar tender for 1 GW and many investors are planning big solar panel parks in order to sell power to industries and commercial establishments which are obligated to buy 6% of their power requirements from solar energy by 2016. However solar rooftop systems have been left in the lurch by the policy as there are negligible incentives and financing options.

The government should learn from the experience of countries with large solar capacities like Germany, Spain which are strongly promoting small distributed solar rooftop systems after getting their fingers burnt in large scale solar farms. If most of the money is being made by large investors then there will be a backlash against solar energy which is a result nobody wants.

Why Rooftop solar systems are not getting built in TN despite a 350 MW target by 2013

1) Very small Generation Based Incentive (GBI) with lack of clarity on payment – TN is targeting only 50 MW generation from rooftop sources which is only 5% of the total target and even for that it is offering a pitiable Rs 2 per kilowatt hour in the first two years, Re 1 in the next two and 50 paise in the following two years. This GBI barely will cover 5% of the solar system cost on a NPV basis.

2) MNRE subsidy exists but only on paper – The federal government gives a subsidy of about 30% for solar power systems for home but getting this subsidy through the bureaucratic red maze is an impossible task.

3) No financing support for small solar panel systems – The success of home solar rooftop systems in countries like Germany was due to the active support given by the banks like Kfw to finance rooftop solar systems. The procedures are so easy that you can get a loan in a couple of days. In TN getting this loan in a couple of months is an impossibility.

Mechanism to generate 3000 MW by 2015

The 3000 MW of Solar Power will be achieved through Utility Scale Projects, Rooftops, and under REC mechanism as follows:

Utility Scale (MW) Solar Roof Tops (MW) REC (MW) Total (MW)
(a) (b) (c) a + b +c
2013 750 100 150 1000
2014 550 125 325 1000
2015 125 125 675 1000
Total 1500 350 1150  3000

In utility scale out of 1500 MW, 1000 MW will be funded through SPO and balance 500 MW through Generation Based Incentive (GBI) provided by the Government.

More Information

India’s federal solar subsidy policy JNNSM Phase 2 will see a shift in emphasis from large solar farms to grid connected solar rooftop and off grid solar projects. Note JNNSM Phase 1  saw 1100 MW of solar projects awarded through a reverse auction over 2 batches in Phase 1. Almost all the solar projects were large megawatt solar farms awarded to big energy producers or solar developers. Greenworldinvestor had criticized the policy of supporting solar ground mounted projects as the current trend is to support distributed solar rooftop projects all over the world. However some good common sense has made the Indian Government now look towards supporting smaller solar panel installations over the utility scale solar projects. The funding will be done through the recently set up Solar Energy Corporation of India and through Generation Based Incentives. Note Gujarat which has the most successful solar power policy in India has also announced a number of solar rooftop schemes in different cities.

What Indian Solar Energy needs – Focus on Small Distributed Rooftop and Off Grid Solar

Solar Energy incentives in most of the developed solar markets in Europe have clearly shifted their preference to distributed small rooftop solar installations on residences. This is because it reduces the need for expensive power generation infrastructure, improves reliability and puts money in the hands of the common citizens. Spain, Germany and Italy which are the 3 biggest markets in the world have done this. India however has not paid any focus to rooftop solar installations except for Delhi. Electricity in India is not only expensive but also highly unreliable and of low quality. Low voltages and blackouts of 10 hours are not uncommon .Having a reliable home based source of power would be attractive to most people in India even at higher costs (note electricity tariffs have been outgrowing inflation). It would also lead to reduced losses in the power transmission which is the highest in the world at around 30%. The advantages of promoting residential solar is much more however the policymakers have not given enough thought with half of the subsidies going to Solar Thermal Technology, which is fast losing out to Solar PV technology. India’s solar policy makes it clear that the decision makers do not have enough knowledge about the developments in this fast paced solar energy sector to make the optimum decisions.


Grid connected rooftop solar projects will come in a big way in the second phase of the Jawaharlal Nehru national solar mission (JNNSM) and there will be a huge impetus to off-grid solar applications, said Tarun Kapoor, joint secretary, ministry of new and renewable energy at the 6th Renewable Energy Expo.In the second phase, government plans to add 3,000 mw of solar power to the current capacity of 1100 mw. It also plans to roll out new means of financing for the solar projects. “” We plan to include various financing measures along with power bundling with conventional power like viability-gap funding (Vgf) and generation-based incentives. Vgf will be given greater importance and the newly formed Solar energy corporation of India (SECI) will take care of it,” said Kapoor.

Advantages of Solar farms over rooftop solar installations

1) Lower Cost and  Scale – The greater scale of these plants allows lower installations compared to smaller installations. The costs  are reduced in permitting, maintenance as well.

2) Use of Disturbed Land – Solar Farms can be built on disturbed land like in Germany where they have been built on former airbases.

3) Utility Friendly – Large Solar Farms are controlled by utilities or IPPs while rooftop solar is generally in the ownership of residential owners or commercial owners. This results in less pushback from utilities which generally control transmission and allow easier acceptance of solar energy.

Disadvantages of Solar farms over rooftop solar installations

1) Long Delays in Permitting, Environment Clearance, Land Siting – Large Solar Farms have to go through a myriad of regulations and clearances. There have also been instances of lawsuits against solar thermal and solar PV plants in California by wildlife and environmental groups as well as local Indian tribes.

2) Electricity Transmission Costs – Grid Connection leads to additional costs for solar farms while rooftop solar can use existing transmission infrastructure.

3) Less Grid Stability – A Large Part of Distributed Solar is consumed locally while Farms supply 100% to the grid. That makes managing the grid difficult when solar penetration increases.


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

4 Responses so far | Have Your Say!

  1. Keerthy Kumar

    Hi Sneha, i am from TN, and my electricity usage is around 1000 units per months, i researched and thought about solar at my roof top, after considering all the suggestions and inputs from one supplier cum installer i concluded that the pay back would be more than 8 years considering the current power price of Rs. 5/- per unit with No Incentive/subsidy as i would be installing around 8KW, (heard incentive is only for 1KW). I Hope CM distributes Solar panel for next election camping instead of TV, Grinder Sets… Ammen…

  2. wdas

    I have sucessfully incoporated solar power on my apartment by putting a small solar panel of capacity 240 watts for about 15000/- rupees. I replaced my old fridge with an inverter fridge 360 litres. I run my computer on solar energy and also my TV during day time. My bill has come down at least Rs 1200/- every month from last years. I have already got back my investment in solar panel and will get my investment in high efficiency inverter fridge in next year. so any body with an initiative and determination can make his house black out proof with very little investment. My current bill for Nov, Dec for 2 bedroom apartment is only Rs 760/-. Last year it was Rs 2000/-.

  3. Bala

    Dear Madam,
    your blog is a nice compilation of corporate news, policy news, analysis across india. Accidentally, I stumbled upon this link and found tons of information and analysis compiled and presented. Great job and thanks. I do support the idea of distributed micro sized plants that serve small groups / homes. The beaurocrates and the minister should be theoratically strong to comprehend the dynamics of this field – sustainable energy. India will not only get cheap energy, but also get out of the clutches of the balance of payment caused by fuel imports.