With an extended summer and an increase in electricity consumption, there have been power cuts in the state. It’s not just Tamil Nadu. Other states have also been facing power cuts.

At 9.30 p.m. on 21 September, Uttar Pradesh had 199 reported power cuts, followed by Tamil Nadu with 188 outages, as per a crowd-sourced tracker. At 9.30 a.m. the next day, both the states were at the lead with 200-odd reported outages. 

While not all MSMEs operate at night, daytime power cuts severely affect their production. Installing rooftop solar (RTS) panels would help them overcome the problem, in addition to offering other benefits such as emission reduction. 

As about 75% of electricity consumption by MSMEs happens between 9 a.m. and 4 p.m. — the exact window of time when solar power can be generated — RTS can fulfil their energy needs.

So why is RTS uptake low among MSMEs? 

MSMEs And Emissions

India has over 96 million registered MSMEs. The contribution of MSMEs to India’s economy is substantial, accounting for 35.40% of manufacturing, 48.58% of exports, and 31.10% of GDP. 

MSMEs’ carbon emissions are also large, accounting for 135 million tonnes of carbon emissions (MtCO2e) in 2022, as per Roadmap for Green Transition of MSMEs, a 2026 NITI Aayog report. Given their contribution to industrial emissions, NITI Aayog considers decarbonising MSMEs as the ground zero for climate action. 

For India to achieve its Net Zero commitment by 2070, industrial decarbonisation is necessary. As MSMEs account for 30% of industrial energy demand, they need to switch to renewable energy — solar being the easiest option.

Ideal For MSMEs

The untapped RTS potential among MSMEs is 16–18 GW. A survey by Climate Investment Funds (CIF) in six MSME clusters across India showed that more than 90% of MSMEs operated in their own premises, and hence had the space for installing RTS. 

But Pashu Gopalan — whose company Fenice Energy has 75% small commercial establishment clients — finds lack of space as one of the barriers for RTS adoption.

MSMEs spend 5–20% of their operating cost on electricity, depending on the type of product and production process. RTS would be an ideal solution to reduce their electricity cost. 

Pankaj Sharda, partner at Sharda Cotton Industries at Sirsa, Haryana, installed a 380-kW system two years ago. Despite paying about ₹1.17 lakh as monthly fixed charges, the company saves ₹20 lakh a year.

Solar energy has been the popular renewable energy source in the recent past. The installed capacity of wind and solar energy were almost equal at 3.4 and 3.1 GW respectively in 2015-16; as of August 2026, wind is at 58 GW and solar is at 168 GW. 

Industry experts cite ease of installation and maintenance as the reason for the rapid growth of solar. Besides, the solar tariff has drastically come down from ₹18 per kilo-watt hour (kWh) or unit in 2010 to ₹2.44 in 2026. 

Despite these reasons, RTS adoption among MSMEs has been low.

Low Uptake

The commercial and industrial (C&I) segment has the highest capacity installation at 80%, large firms accounting for the majority. Though MSMEs form the largest number in the C&I segment, their RTS uptake is low, acknowledges Identifying barriers for rooftop solar uptake in MSMEs, a NITI Aayog report.

Puducherry-based Auroville Consulting that recently completed a survey about the RTS readiness of MSMEs in Tamil Nadu found access to finance as the biggest barrier, besides lack of awareness about financing schemes.   

“The Central government has made RTS for the residential segment a big focus. Getting a loan is exceptionally simplified and rapid,” says Gopalan. “There’s no such push for MSMEs.”

Gopalan points out the difficulty MSMEs face in getting a loan for RTS as most of them have already taken a loan for their primary business and so do not have a collateral for a second loan. 

“While it does reduce the cost of electricity, it’s not a must-have. It's like a vitamin and not so much a painkiller,” says Gopalan. “If they had money, they’d rather put it in their primary business than on vitamin.”

Pankaj Sharda installed the system, paying ₹160 lakh from his pocket. “We should get ₹40 lakh as subsidy. After following up for two years, it was sanctioned only a month back. But the department hasn’t yet remitted it, citing lack of funds,” he says. 

Not everyone would be able to spend for RTS from their own resources.

Many of the pan-India companies in the solar industry opine that the policies of Tamil Nadu — which the electricity department keeps revising — are not conducive. 

L.R. Venkatesh, Managing Director of Vesat Renewables and Secretary of Tamil Nadu Solar Energy Developers Association, cites difficulties in certain formalities. “In other states, up to 500 kW no safety certification by the electrical inspector is required. In Tamil Nadu, a system above 10 kW needs to be certified. Some districts are short of inspectors, leading to delays in commissioning by a few months,” he says. “This, in effect, is a loss for the MSME as they start paying EMIs on their loan without using RTS.”

Tamil Nadu charges ₹1.60 per unit as network charges. “It’s not for the units exported to the grid but for the total units generated. So, you are paying for the solar power you generate,” says Venkatesh. While many states do not levy network charges, a few charge a meagre ₹0.20–0.30 per unit, he adds.

Other states also change policies. In Haryana, the fixed charges have recently been increased. 

“MSMEs face difficulties in navigating policies, approval procedures, system sizing, vendor selection, maintenance and financial evaluation,” says Martin Scherfler of Auroville Consulting.

Government Initiatives

With 12 million, Maharashtra has the maximum number of MSMEs, and has big potential for the industries to go solar. 

Six months ago, Maharashtra introduced Mukhyamantri Innovative Laghu-Udyog Saur Yojana (MILSY), a scheme for solarisation of MSMEs. “The scheme is only for MSMEs as big companies have their own capital to install solar,” says Chetan G. Pathare, Chief General Manager In-Charge at Mahatma Phule Renewable Energy and Infrastructure Technology Limited (MAHAPREIT), the government agency implementing MILSY. 

Survey agencies engaged for MILSY reached out to MSMEs, primarily in industrial zones such as Thane, Kalyan, Trans Thane Creek, Taloja, and Chhatrapati Sambhajinagar. About 8,000 of them have shown interest in installing RTS. The MILSY team makes presentations for industrial associations and has further discussions with those interested.

“The MSMEs don’t have to make any investments for rooftop solar. Renewable energy service companies or RESCOs — funded by banks such as NABARD (National Bank for Agriculture and Rural Development) — invest on behalf of us,” says Pathare. “The RESCOs — eight as of now — undertake a technical feasibility study to check the weight-bearing capacity and shadow-free area of the roof.” 

In Maharashtra, the gross electricity rate for industries is ₹11–12 per unit. But MSMEs generating solar power get it at a subsidised rate of ₹4.5–5, which will be fixed for 20–25 years. They don’t have to spend on operation and maintenance either as MAHAPREIT takes care of that, says Pathare.

In Tamil Nadu, MSMEs installing rooftop solar panels will get a five-year 100% electricity tax exemption, as per the Energy Department’s Policy Note — the electricity tax being 5%. “This exemption was already in place and has now been extended,” says Scherfler. But he and other experts feel that it is not attractive enough.

In December 2023, the Central government introduced the Green Investment and Financing for Transformation (MSE-GIFT) scheme for Micro and Small Enterprises. Implemented by the Small Industries Development Bank of India, it encourages adoption of clean energy sources through financial benefits such as interest subvention and risk sharing. 

For Better RTS Adoption

A few experts recommend simplified and faster approvals, besides improved financing through concessional loans and blended finance for better adoption of RTS among MSMEs.

Scherfler opines that the technical support to MSMES should be strengthened through advisory services, assessments, and aggregated procurement.

NITI Aayog’s roadmap recommends demand aggregation. “The demand of several MSMEs in a geographical location is aggregated into a single project so that they get a high purchase power/negotiation power. The advantage for the solar EPC model is a single large project, which reduces operation and maintenance and servicing costs,” explains Scherfler. 

Auroville Consulting tried this in Tirupur, with 30 MSMEs indicating interest. Then the US imposed import tariffs and it could not be implemented. As the textile sector experienced uncertainties with the orders, industries were reluctant to invest. Auroville Consulting plans to try again, “focusing on an industrial estate that has common facilities, and rope in a strong financing partner for lending”.

Banks should approach industrial associations to increase awareness about green financing, opines an industrialist.

Many experts, including Scherfler and Pathare, feel promoting battery energy storage system (BESS) will increase RTS uptake. It would certainly help MSMEs overcome the problem of power cuts and the deployment of diesel generators.

(The writer is a independent journalist. Views are personal)