Rooftop Solar Gets A Fresh Push From Government, Can Catalyse India's Clean Energy Journey

The allocation will take care of the expenses of providing financial assistance of up to Rs 78,000 for installing a rooftop system, and an incentive of 300 units of free electricity per month.

 

Thursday’s Cabinet approval follows up on the announcement made by Prime Minister Narendra Modi in this regard shortly after his return from the Pran Pratishtha ceremony in Ayodhya in January. Finance Minister Nirmala Sitharaman had included this promise in her Interim Budget speech but the details were missing.

 

The government has now said that it would provide financial assistance that would cover 60 per cent of the cost of a 2-kilowatt system and 40 per cent of the additional cost for a system greater than 2 kw capacity but up to 3 kw. At current prices, this is likely to translate into financial assistance of Rs 30,000 for a 1 kw system, Rs 60,000 for 2 kw system, and Rs 78,000 for 3kw or higher capacity systems. Those installing these systems would also be eligible for collateral-free low-cost finance, at about 7 per cent interest, for other installation-related expenses.

 

The intention is clear. The government is moving ahead to realise the untapped renewable energy potential, including from the residential sector. In her budget speech, Sitharaman also announced a new viability gap funding scheme for offshore wind, the wind power projects that are located in the middle of the sea for achieving greater efficiencies.

Offshore wind has not yet been tried out in India, though significant potential has been assessed to exist, mainly off the coast of Gujarat and Tamil Nadu. However, the main entry barrier has been the high capital cost and policy uncertainties. The viability gap funding is aimed at addressing some of those issues.

 

 

Rooftop Solar A Slow Starter

The push for rooftop solar is not new. The rooftop solar programme has been around for almost a decade now. In his first major intervention in the energy sector after becoming the Prime Minister in 2014, Narendra Modi had decided to scale up the then-existing target for solar installed capacity by five times -- from 20 GW to 100 GW. The target was to be completed by 2022 and 40 per cent of it or 40 GW, was to be achieved through rooftop solar power.

 

Over the years, while utility-scale ground-based solar power projects showed a phenomenal rise in capacity, almost achieving the 60 GW target by 2022, rooftop solar remained a laggard. By the middle of 2019, less than 2 GW of rooftop solar had been installed. It is because of the slow progress of rooftop solar that the 100 GW target remains unrealised even today. As of January this year, the total solar installed capacity has reached 74.3 GW, according to data from the Ministry of New and Renewable Energy.

 

Rooftop solar installations have gathered an impressive pace in the last few years, however, with the government tweaking some policy measures and providing financial assistance for adoption. Average annual capacity additions have been close to 2 GW during this time, with the total capacity reaching 11 GW by the end of January. In the current fiscal year, new capacity to the tune of about 4 GW is likely to be added, according to the estimates in a report published by the Institute for Energy Economics and Financial Analysis in August last year.

 

 

Low Penetration In Residential Segment

Within the rooftop solar sector, the penetration in the residential segment has been extremely low. Just about 20 per cent of the current capacity has been installed in residential buildings. The overwhelming majority of installations have happened in commercial and industrial buildings.

Costs again have been the prohibitive factor in less than enthusiastic adoption of the programme in the residential sector, with easy access to finance to individual householders remaining a bottleneck. The Secretariat recently highlighted some of these challenges in an article documenting experiences from Modhera in Gujarat, which has been touted as India's first 100 per cent solar-powered village.

 

However, there is tremendous potential for rapid growth of rooftop solar in the residential segment. A recent analysis by the Delhi-based Centre for Energy, Environment and Water (CEEW) showed that more than 100 GW of solar power could easily be installed through rooftop systems on residential buildings. It is this potential that the Suryoday Yojana is seeking to realise.

 

Unlike the previous programme, the target for Suryoday Yojana has been defined, not in terms of capacity addition but the number of households. But if the 10 million household target is indeed achieved, it would easily translate into 20-25 GW of capacity addition.

 

However, it is not an easy target. A fresh set of incentives, both for the individual householder as well as electricity distribution companies would be required to make it a success.

Electricity produced by the rooftop systems is not consumed internally. In most cases, the electricity generated is fed into the grid and the owner of the rooftop system receives a per unit price for making that electricity available. The owner buys electricity from the same grid for consumption. The prices for buying and selling electricity are usually different, and it is here that the interests of the rooftop system owner and the grid operator often do not align.

Offering attractive incentives for both parties is key to the success of the programme. The 300 units of free electricity, which the government says can result in savings of about 15,000 to 18,000 rupees every year, is just the sort of financial incentive that could facilitate the adoption of this programme. But how the government addresses the concerns of distribution companies and grid operators, most of whom are struggling with their finances, remains to be seen.

 

 

Climate Change Compulsions

The renewed push to rooftop solar programme and the attempt to try out off-shore wind are both guided by the larger climate change imperatives. India is in the process of making a transition to cleaner sources of energy, and that means increasing the deployment of renewables and non-fossil fuel sources.

New capacity additions to cater to the expected rise in demand have to be met mostly through these cleaner sources. India has committed itself to ensuring that at least 50 per cent of its total electricity installed capacity in 2030 will come from non-fossil fuel sources. This includes not just solar and wind, but also biofuels, small hydro, and nuclear.

The share of non-fossil fuel sources in total electricity capacity has already reached about 43 per cent, so the 50 per cent target for 2030 is not out of reach. But India’s energy demand is expected to rise sharply in the coming years, and most of it would have to come from solar, wind and biofuels.

 

India is banking heavily on biofuels as well, having joined in the launch of a Global Biofuels Alliance at the G20 meeting last September. In her budget speech, Sitharaman announced financial assistance for the procurement of biomass aggregation machinery as well in an effort to improve biomass collection for increased production of biofuels.

 

These measures are important from the perspective of energy security and increased energy access as well. India’s per capita energy consumption, despite having doubled since 2000, is still a third of the global average. Rooftop solar in the residential sector can go a long way in correcting this anomaly.

(The author is a sustainability expert and Deputy Editor at The Indian Express. Views expressed are personal)