Sad State of Rooftop Solar in Indian States

The Indian rooftop solar sector has been growing by leaps and bounds despite the Indian power distribution utilities reluctant to promote this technology. The massive difference in cost between the rooftop solar power and the price paid by Indian industrial and commercial customers have made it irresistible. The difference can be as high as 200% of the cost of rooftop solar power. This has made distribution utilities try to attack the growth of rooftop solar using regulations by the state electricity regulator.

The net metering policy was adopted by most Indian states to promote the growth of solar power in the last five years; however, this policy is now being reversed by major Indian states who are finding their high paying consumers migrating en masse away to distributed rooftop solar power. The savings from putting up solar panels can run into millions of rupees for even small industrial units who pay high rates to subsidize customer categories such as farmers and residential customers. The Indian states typically charge low-end residential customers very low rates which is much below the actual cost of supply power. A number of Indian states do not charge any money from agricultural consumers. This means that billions of dollars have to be given as a power subsidy each year. A part of this subsidy is recovered from industrial and commercial customers who typically have to pay much higher rates artificially raising the power prices from them.

Maharashtra and Uttar Pradesh have already brought in policies that would not allow net metering for industrial and commercial consumers, now Karnataka which is another large industrial state has ordered that only gross metering would be allowed. Under this accounting mechanism, the distribution utilities will continue to charge high power prices from consumers but only pay a trifling amount of the solar power generated by these consumers. This will make the economics of rooftop solar go haywire and kill the rooftop solar industry in these states at least for the large commercial and industrial categories.