Funding in Indian Rooftop Solar

The Indian rooftop solar market potential is huge with the government setting up a target of 40000 MW, compared to only 350 MW which is installed pan India. This means exponential growth in the coming years and most of it will be driven by private players. Unlike the grid scale ground mounted farms, the government has not given a lot of subsidies or tenders for rooftop solar systems making us question the achievability of this target. From less than 200 MW a year, scaling up to multi gigawatt target every year is going to be challenging for the ecosystem in terms of grid integration, financing etc.

Also read 4 Reasons why Residential Rooftop Solar Installation is still not popular in India.

However, some firms have already starting large scale funds in anticipation of this massive rollout. Unlike large ground farms, rooftop solar systems do not require the same scale and balance sheet strength. Rooftop is also more democratic as it allows a much larger number of companies to participate given the smaller ticket sizes. While there will be some large companies that will play in this space, there will also be many small sized players that can coexist in the same space. Financing may be a key differentiator for the aggressive companies, since consumers may prefer to go in for solar leases or pay per use business models. Not many individuals or companies want to go in for the large upfront capex that is required for rooftop solar systems.

Asset manager I Squared Capital recently invested $150 million into DG company Amplus Energy Solutions. This is a big investment in an almost unheard of name in the Indian renewable energy space. Note most of the investments have been made mostly in the large grid scale renewable energy projects in the solar and wind energy space. This is the first time that such a huge investment has been made into the rooftop solar space. Another small firm Fourth Partners recently won a $2 million investment from Infuse Ventures, which is an IIM Ahmedabad based incubation vehicle. Azure Sunlight also got a substantial funding from a USA based fund.

Rooftop solar is starting to heat up in India, even though the government has not really pushed this space hard. The 10 GW of projects that have been pushed into the solar pipeline are almost all in the grid scale large solar farms with almost nothing for the rooftop space. Unless the government provides more of a push this 40 GW target may remain a target in name only.