ROOFTOP SOLAR INSTALLATIONS AT A LOW KEY
New rooftop solar installations in India fell to a four year low in the first half of 2020 due to policy changes, financing costs and the impact of covid-19 pandemic slowing India’s transition to a green energy regime. Only 473 MW of new rooftop systems were installed between January and June this year as residential and industrial customers have stepped back. Last year during the same period 1,534MW of rooftop solar was installed.
As of June 2020, India had installed rooftop solar capacity of 5,953 MW of which commercial and industrial (C&I) sector amounted for 73% and residential rooftop solutions about 80MW. The achievement is far below India’s target to achieve overall rooftop solar target of 40GW by 2022. Despite demand for rooftop solar power the sector is facing formidable challenges including not so favourable State policies. One of the main difficulties being faced by rooftop customers is that financing has to be done upfront and with banks not lending as easily now compared to the past. The state distribution companies (discoms) are also making it difficult for commercial and industrial customers to migrate away from grid power as discoms get a very large share of revenue from them as they pay higher tariff.
A rooftop owner generates power during the day for his own consumption and supplies excess to the grid. When the unit is not operational, the consumer draws power from the grid. Under net metering, energy from the rooftop unit is set off against energy purchased from the grid and the difference is billed at a set tariff. This provides a financial incentive to the power consumers to generate and maintain their own electric supply and reduce dependence on the grid. This financially hurts discoms and many states such as Karnataka, Tamil Nadu, Uttar Pradesh and Gujarat have gross metering/net billing policies wherein the consumer sells the excess to the grid at a lower rate than at what they purchase. This disincentivizes the customers from expanding their capacity.
Net metering rules are currently set by individual states, though the Draft Electricity Amendment Bill proposed by the Ministry of Power this year has proposed a uniform National Policy that allows net metering upto 5KW of rooftop capacity and gross metering beyond that. The C&I customers are looking more positively at the policy as they want to cut down costs, but if gross metering is approved then they will not find these proposals to be feasible. In Karnataka there are no new C&I installations coming up after gross metering has been implemented.
Despite slow growth, foreign investors are keen on buying rooftop solar portfolios of large developers.