IEEFA - JMK - Rooftop Solar Commercial and Industrial Market - August 2023

The Rooftop Solar Commercial & Industrial Market in India 2
Contents
Key Findings .................................................................................................................................................. 4
Executive Summary ...................................................................................................................................... 5
Introduction ................................................................................................................................................... 8
Policy Updates ........................................................................................................................................... 12
State Attractiveness Index for Rooftop Solar C&I Market in India ......................................................... 18
Emerging Trends in the Rooftop Solar C&I Sector ................................................................................. 20
Financing Trends in the Indian Rooftop Solar C&I Sector...................................................................... 25
Policy Recommendations .......................................................................................................................... 29
Conclusion ................................................................................................................................................. 31
Annexure 1: Financing Schemes Available to the MSME Segment ...................................................... 33
About JMK Research & Analytics ............................................................................................................. 35
About IEEFA ............................................................................................................................................... 35
About the Authors ...................................................................................................................................... 35
Tables and Figures

Figure 1: Grid-connected Rooftop Solar Installation Trends in India ........................................................ 8
Figure 2: State-wise share in rooftop solar installations (as of 31 July 2023) .......................................... 9
Figure 3: Breakup of Rooftop Solar Installations (as of 31 March 2023) ............................................... 10
Figure 4: Year-wise Tariff Trends for OPEX-based Power Purchase Agreement (PPA)
Rooftop Projects (March 2023)................................................................................................................. 11
Figure 5: Payback Period of Industrial Solar Installations in the CAPEX Model in India
(March 2023).............................................................................................................................................. 11
Figure 6: Change in Net Metering Limits Across States ......................................................................... 14
Figure 7: P2P Energy Trading................................................................................................................... 22
Figure 8: Key Financing Deals in the India Rooftop Solar C&I Sector (2015-2023) ............................. 25
Table 1: Attractiveness Index of States in Solar Rooftop Installations for C&I Consumers ................. 18
Table 2: Various Virtual Net Metering Models and their Applications ................................................... 22
Table 3: Benefits of P2P Energy Trading for Prosumers and DISCOMs ............................................... 23
Table 4: P2P Trading Pilot Project Overview ........................................................................................... 24
Table 5: Key Parameters Under “Central Guidelines and Rules for Rooftop Solar” ............................ 29
Key Findings
According to industry estimates, fiscal year (FY) 2024 will see the
largest installations of rooftop solar to date of about 4 gigawatts (GW).
Out of this, 2GW has already been installed between April and July 2023.
Micro, small and medium To spur activity in the rooftop

enterprises (MSME) remain market, regulators are actively
largely untapped for their rooftop exploring innovative business
solar potential, currently pegged models, such as Virtual net
at around 15GW. metering and peer-to-peer
trading.
According to JMK Research-IEEFA’s analysis, states like Gujarat, Andhra

Pradesh and Telangana, and the union territory of Delhi, have the most
favourable ecosystems for setting up rooftop solar projects. States like Tamil
Nadu and Uttar Pradesh continue to discourage their high-paying C&I
consumers from shifting to rooftop solar-based solutions.
Executive Summary
India’s rooftop solar market is bubbling with new energy, even though there are
major roadblocks. The country is likely to add a record-high 4 gigawatts (GW) of
rooftop solar power capacity in fiscal year (FY) 2024, half of which has already been
installed in the first four months, according to industry estimates. While the market
for large creditworthy commercial & industrial (C&I) customers for rooftop solar is
saturated, micro, small and medium enterprises (MSMEs) offer a large untapped
potential. We believe the next phase of growth in the rooftop solar market will come
from the MSMEs. Financers have only now started to develop products to cater to
the segment. But, they continue to see rooftop solar as a risky investment. We also
see the need for state-level policies to support rooftop solar. Although Gujarat,
Andhra Pradesh, Telangana and the union territory of Delhi are leading the way,
many others need to a create environment that supports rooftop solar through
policies as well as approvals by electricity distribution companies (DISCOMs).
We note that some regulators have started exploring new and innovative business
models like virtual net metering and peer-to-peer trading to spur activity in the
rooftop solar market, as these business models are beneficial to both consumers
and DISCOMs.
Rooftop solar is an important market segment of India’s solar sector. It comprises on-site solar
installations connected in a behind-the-meter (BTM) configuration on the consumer’s premises. It
provides buyers a viable option to green their electricity consumption by procuring on-site cheaper
and cleaner renewable energy.
JMK Research and IEEFA’s previous work in this segment provides details about the evolution of this
sector.1 This report attempts to capture recent market trends that have shaped this sector, especially
in the last two years, new regulatory updates across central and state levels, new financing trends,
and innovative business opportunities that can spur activity in the rooftop commercial and industrial
(C&I) segment.
According to the Ministry of New and Renewable Energy (MNRE), as of July 2023, the cumulative
installed capacity of rooftop solar in India was 10.9 gigawatts (GW). This represents a share of
around 15% of the total solar installations in India. Until fiscal year (FY) 2019, rooftop solar
installations in India were a meagre 1.8GW. Since then, the rooftop solar market has consistently
grown by around 1.9-2.2GW annually. According to industry estimates, FY2024 will see the largest
1
JMK Research and IEEFA. Powering Up Sunshine – Untapped Opportunities in India’s Rooftop Solar Market. July 2020.
installations to date of about 4GW. Out of this, 2GW has already been installed between April and
July 2023. 2
According to JMK Research-IEEFA’s analysis, states like Gujarat, Andhra Pradesh and Telangana,
and the union territory of Delhi, have the most favourable ecosystems for setting up rooftop solar
projects. Conducive net metering policies, ease of regulatory approvals and potential monetary
savings that a C&I consumer can realise by adopting rooftop solar influence a state's attractiveness.
States like Tamil Nadu and Uttar Pradesh continue to discourage their high-paying C&I consumers
from shifting to rooftop solar-based solutions.
Conducive net metering policies, ease of regulatory approvals and potential

monetary savings that a C&I consumer can realise by adopting rooftop solar
influence a state's attractiveness.
As part of India’s overarching National Solar Mission, the government envisioned the installation of
100GW of solar capacity by 2022. Out of this, 40GW was assigned to rooftop solar. To achieve the
40GW target, the central government launched two phases (in 2015 and 2019) of the Grid-
Connected Rooftop and Small Solar Power Plants Programme. The programme provided incentives
through central financial assistance (CFA) to install rooftop solar plants.
Despite the government’s efforts, by the end of 2022, only 8.1GW had been installed, according to
data from the MNRE. This massive shortfall (around 80%) in the target forced the MNRE to extend
the timeline of Phase-ll of the programme by more than three years to March 2026.
There are several major roadblocks hindering the growth of the rooftop solar market in India. These
include regulatory issues, such as inconsistent net metering policies across states. Net metering is a
crucial parameter that influences the financial viability of a rooftop solar plant. Fearing loss of
revenue from their high-paying C&I consumers, certain state electricity distribution companies
(DISCOMs) sometimes delay the net metering approval or fail to provide approval altogether.
In some states, the implementation of Green Open Access Rules, 2022 shifted the market attention
for solar development from rooftop solar to open access (OA), leading to state regulators prioritising
OA approvals over rooftop solar.
In addition to regulatory concerns, financing continues to be a major challenge for the rooftop solar
market. Compared to other solar segments (utility-scale and OA), leading financers generally
perceive rooftop solar plants to be riskier investments. Loans for rooftop solar installations generally
carry a higher interest rate and have longer approval times, ultimately defeating the purpose of
installing rooftop solar, which has a better rate of return and low payback period.
2
MNRE
To spur activity in the rooftop solar market, regulators are actively exploring new and innovative
business models, such as virtual net metering and peer-to-peer (P2P) trading.
Through virtual net metering, consumers at different locations can aggregate and source rooftop
solar power from a single, large solar plant. Virtual net metering can help bridge the gap between
utility-scale and rooftop solar installations as it helps consumers set up large-sized installations by
taking advantage of economies of scale.
In P2P trading, consumers in the same DISCOM jurisdiction can trade excess solar power. Providing
an alternative to net metering, this model ultimately allows energy consumers to become energy
prosumers.
Despite accounting for around half of the industrial electricity consumption in India, micro, small and
medium enterprises (MSME) remain largely untapped for their rooftop solar potential, which is
currently pegged at around 15GW.3 The lack of adequate financing avenues for MSMEs is the key
reason for this situation. However, MSMEs have recently undergone an evident yet gradual
behavioural shift towards green energy. To address this demand, several rooftop solar financers are
formulating MSME-focused lending plans and allowing them collateral-free loans.
The onus is now on policymakers and regulators to develop solutions to accelerate

deployment in the rooftop solar segment in India.
Of all the solar market segments in India, rooftop solar has historically remained a laggard. The onus
is now on policymakers and regulators to develop solutions to accelerate deployment in the rooftop
solar segment in India. Some of the solutions that they can consider are:
• Create separate renewable purchase obligations for decentralised renewable energy
systems, which can include rooftop solar.
• Permit BTM systems across states irrespective of sizing constraints. Once recognised, this
segment can help DISCOMs accurately forecast their load schedule and will be key to
achieving the government’s 40GW rooftop solar target by 2026.
• Have uniform regulatory provisions across states. Blanket guidelines and rules for the rooftop
solar market issued by a central authority, similar to the Green Open Access Rules, will be
hugely beneficial.
• Strictly enforce solar procurement targets so that state and central regulators can facilitate
the adoption of rooftop solutions by MSMEs.
With the right policies and support, it is possible to unlock the massive potential of rooftops across
India.
3
Financial Express. Why MSMEs are hesitant in embracing non-conventional energy sources like rooftop solar. April 2022.
Introduction
India’s total installed capacity of grid-connected rooftop solar plants as of 31 July 2023 was 10.9
gigawatts (GW).4 Of this, more than 75% or approximately 8.4GW, was installed between April 2021
and July 2023.
Until the fiscal year (FY) 2019, the total installed capacity of rooftop solar in India was a meagre
1.8GW. Since then, India has seen an annual installed capacity addition of 1.9-2.2GW, with
cumulative installations reaching 8.1GW by the end of 2022. In the April-July 2023 period, about
2GW was added, which was a record high for any such period.
According to industry estimates, rooftop solar installations in FY2024 will likely reach a record high of
around 4GW. This growth can be attributed to the easing prices of solar modules, the partial
deferment of the Approved List of Models and Manufacturers (ALMM) until March 2024 and an
increase in domestic module manufacturing capacity.
Figure 1: Grid-connected Rooftop Solar Installation Trends in India
4500 14000
4000 12000
3500
10000
3000
2500 2206 2232 8000
MW
MW
1924 1996
2000 1796
6000
1500
4000
1000 719
500 2000
0 0
Until FY2020 FY2021 FY2022 FY2023 FY2024 FY2024e
FY2019 (April-July
2023)
Annual addition (MW) Cumulative Capacity (MW)
Source: MNRE
In terms of states, Gujarat leads the way with a 26% share. Gujarat’s success story is due to its
favourable policies and other initiatives that Gujarat’s electricity distribution companies (DISCOMs)
have introduced in the last few years. Maharashtra (15%), Karnataka (14%), Rajasthan (9%) and
Kerala (5%) have also added significant capacity of grid-connected rooftop solar plants. The top 10
states comprise around 86% of India’s rooftop solar installations.
4
MNRE
Figure 2: State-wise share in rooftop solar installations (as of 31 July 2023)
Others
14%
Madhya Pradesh Gujarat
3% 26%
Punjab
3%
Telangana
3%
Haryana
4%
Tamil Nadu
4%
Kerala
5% Maharashtra
15%
Rajasthan
9%
Karnataka
14%
Source: MNRE, JMK Research
In terms of consumer segments, commercial and industrial (C&I) consumers added the bulk (~66%)
of rooftop solar capacity in India. The other 34% of rooftop solar installations are in residential and
government buildings. The lack of consumer awareness, the dearth of suitable financing options and
regulatory issues around net metering have hindered the uptake of rooftop solar in the residential
segment.
Regarding the split by different business models, 5 the capital expenditure (CAPEX) model is more
prevalent, with around 70% additions. The primary reasons for the smaller operating expenditure
(OPEX) share are the substantial contractual and payment risks that project developers encounter
because of a lack of creditworthy C&I consumers.
5
For further information about business models and other details about the rooftop solar market, readers can refer to IEEFA-JMK Research’s
previous work on this market segment: Powering Up Sunshine – Untapped Opportunities in India’s Rooftop Solar Market.
Figure 3: Breakup of Rooftop Solar Installations (as of 31 March 2023)

By segment By business model
Others OPEX
34% 30%
C&I
66% CAPEX
70%
Source: JMK Research
Note: The category of ‘Others’ includes residential and governmental rooftop solar installations.
Tariff Analysis and Payback

In 2019, photovoltaic (PV) modules cost around Rs19.5/Watt-peak (Wp) (US¢24/Wp). After the
government levied a 40% basic customs duty (BCD) on solar modules in April 2022, the prices
increased to Rs25/Wp (US¢30/Wp)6 by 2023. The price increase affected rooftop solar project costs
as well as solar tariffs.
6
JMK Research
Figure 4: Year-wise Tariff Trends for OPEX-based Power Purchase Agreement (PPA) Rooftop Projects
(March 2023)
6.0
5.5 5.5
5.0 5.0 5.0 Around 10-20% 5.0

increase
Rs./kWh
4.5 4.5 4.5

4.2
4.0 4.0 4.0 4.0 4.0
3.8
3.5 3.5 3.5 Imposition
Module prices
of BCD
started rising
3.0
2017 2018 2019 2020 2021 2022 2023
Source: Industry Interviews, JMK Research
For installations under CAPEX mode, with a rise in project costs, the payback period also increased
across states by six to 12 months. This will likely come down soon as module prices have again
started reducing because of falling polysilicon prices globally.
Figure 5: Payback Period of Industrial Solar Installations in the CAPEX Model in India (March 2023)
6.0
5.5 5.5
5.0 5.0 5.0
4.5
No. of years
4.5 4.5 4.5 4.5 4.5 4.5

4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
3.5 3.5 3.5
3.0
2.5
2.0
1.5
Karnataka
Haryana
Andhra Pradesh
Telangana
Maharashtra
Tamil Nadu
Gujarat
Rajasthan
Uttar Pradesh

Note: The cost considered for per kW of rooftop solar installation is Rs50,000. Grid tariff taken from tariff order of respective states.
Policy Updates
India has vast solar energy potential. Policies formulated for the sector play a major role in tapping
into that potential. The central government and various state governments have announced several
new initiatives and policies in the last two years that will impact the next phase of growth of the
rooftop solar market in India. In this section, we discuss some of these policies at the central and
state level.
The central government and various state governments have announced several
new initiatives and policies in the last two years that will impact the next phase of
growth of the rooftop solar market in India.
Central Level
Grid-Connected Rooftop Solar Programme Extended until March 2026
On 30 December 2015, the central government approved the first phase of the Grid-Connected
Rooftop and Small Solar Power Plants Programme. The programme aimed to install 4,200
megawatts (MW) of rooftop solar capacity in the country by 2019-20, with 2,100MW planned through
central financial assistance (CFA) and the remaining without CFA. State nodal agencies (SNAs), the
Solar Energy Corporation of India (SECI), public sector undertakings (PSUs) and other governmental
agencies have implemented the rooftop solar projects sanctioned under this programme.
The major issues that plagued the first phase were the involvement of multiple tendering agencies
and stakeholders, lack of uniform regulations and lack of consumer awareness. In 2019, the central
government approved Phase II of the programme to achieve a cumulative rooftop solar capacity of
40GW by 2022. 7
However, Phase II achieved only 8.1GW of installations until December 2022, around a 79% shortfall
of the 40GW target.8 The shortfall forced the Ministry of New and Renewable Energy (MNRE) to
extend the timeline for Phase II until March 2026. It granted the extension without adding to the
originally approved outlay of Rs118 billion (US$1.43 billion). The programme's extension will
enhance the potential to achieve the 40GW target by March 2026 and present an opportunity to
achieve the central government’s target of 500GW renewable energy capacity by 2030.
7
MNRE. Operational guidelines for implementation of Phase-ll of grid connected rooftop solar programme. August 2019.
8
JMK Research
Launch of National Portal for Rooftop Solar
In 2022, the MNRE issued a simplified procedure for installing rooftop solar plants for residential
consumers. It developed a national portal to implement this procedure and launched it on 30 July
2022. The portal acts as an e-marketplace where consumers, vendors and representatives of banks
providing loans can interact. It also serves as an educational and awareness-raising space for
consumers. The portal provides information about various aspects of rooftop solar, such as the
standards and specifications of a plant. Potential consumers can also access a list of registered
vendors in their area, the ALMM, the rules and regulations issued by various authorities, consumer
grievance redressal, etc.
Since the portal's launch, the MNRE has received a total of 38,413 applications to set up rooftop
solar capacity equivalent to 211MW. According to data furnished by the MNRE, the current rejection
rate of applications on the portal is around 14%.9
Net Metering Limits Revised
In December 2020, the Ministry of Power introduced the Electricity (Rights of Consumer) Rules,
which capped the net metering limit at 10 kilowatts (kW) from 1MW. This revision faced severe
backlash from the industry, due to which the Ministry of Power revised it from 10kW to 500kW in
June 2021. This reduction in net metering affected the growth of rooftop solar capacity addition,
resulting in the failure to fulfil the 40GW rooftop solar target by the end of 2022. The central
government's revisions to the net metering policy have caused uncertainty and ambiguity
among stakeholders.
The central government's revisions to the net metering policy have caused
uncertainty and ambiguity among stakeholders.
State Level
In India, 28 states and union territories have created net metering policies. While 19 states offer net
and gross metering provisions, 16 of them provide only net metering for its C&I consumers. In the
last two years, there have been multiple state-level regulatory changes, which we discuss in this
section.
9
MNRE. STANDING COMMITTEE ON ENERGY (2022-23). March 2023.
Revision in Net Metering Limits by States
Since 2020, in line with the Ministry of Power’s Electricity (Rights of Consumers) Rules, there have
been multiple revisions in net metering regulations, with the cap revised from 1MW to 10kW in
December 2020 and further to 500kW in June 2021.10 Consequently, several states revised their net
metering policies, thereby hindering the growth of the rooftop solar market in India.
Figure 6: Change in Net Metering Limits Across States
Introduction of Net Billing by States
States like Uttar Pradesh and Tamil Nadu have withdrawn the net metering provision for C&I
consumers. Instead, only net billing is available for them. Net billing is a market-based compensation
10
Ministry of Power. Electricity (Rights of Consumers) Amendment Rules. June 2021.
mechanism under which a distribution licensee purchases electricity generated by renewable energy
generating systems. The distribution licensee raises bills on the consumer for their consumption at
the approved grid tariff after giving credit for the total generated electricity against a predetermined
tariff.
The net billing option offers an alternative solution that would not negatively impact DISCOMs’
revenues and would still benefit the end consumer compared to net and gross metering.
Some other states, including Punjab, Rajasthan, Himachal Pradesh, West Bengal and Maharashtra,
have also introduced net billing. It is highly likely that these states will also shift away from net
metering to net billing in the near future. This is because DISCOMs are reluctant to approve net
metering regulations owing to fears of losing high-paying C&I consumers.
Imposition of Grid Charges by Tamil Nadu and Maharashtra
Historically, one of the most significant benefits of installing a rooftop solar system for any consumer
has been zero-grid support or network charges, which result in higher savings. However, over the
last two years, states like Tamil Nadu and Maharashtra have introduced these additional intrusive
charges that can derail the growth of the C&I rooftop solar sector.
Tamil Nadu started levying a network charge on all types of consumers starting October 2021. The
network charge for the low-tension commercial category is Rs1.27/kilowatt-hour (kWh) (US¢1.5/kWh)
and Rs0.83/kWh (US¢1/kWh) for high-tension consumers.11
Maharashtra has also proposed a grid support charge of Rs1.45/kWh (US¢1.8/kWh) on high-tension
consumers once the cumulative rooftop solar capacity in the state reaches 2GW.12 The state has
1.7GW13 of rooftop installations as of 31 July 2023. It is highly likely that from 2024, these charges
will be applicable. Levying such grid charges affects the long-term financial viability of rooftop solar
projects.
Sanctioned Load Limits Removed in Gujarat
In 2023, as part of its third amendment to net metering regulations, Gujarat removed the limitation on
sanctioned load for solar rooftop capacity. According to the revised policy, in Gujarat, a consumer
can install a solar rooftop plant irrespective of its sanctioned/connected load within the limit of net
metering limitation, which is 1MW. This is a first-of-its-kind approach that other states can also follow.
11
Citizen consumer and civic action group. Network charges on grid connected rooftop solar. July 2022.
12
Bridge to India. Facilitating growth of corporate renewable market. May 2023.
13
MNRE
Regulatory Roadblocks
As seen from the above updates, there are many restrictive measures for rooftop solar projects in
the C&I sector. Frequently changing regulations and the imposition of new charges create
uncertainty among investors about the long-term profitability of these projects. We discuss the
impact of some of the recent regulatory challenges below.
Frequently changing regulations and the imposition of new charges create

uncertainty among investors about the long-term profitability of these projects.
Impact of ALMM (Non-Tariff Barrier)
ALMM is a list of models and manufacturers of solar PV modules approved by the MNRE. According
to the ALMM order, solar projects in India can only use listed solar PV models and module
manufacturers.
Under the current ALMM, only 7% of the approved models are available in sizes above 500Wp, and
merely 12.5% are above 400Wp.14 In addition, due to the significant focus on utility-scale solar
projects, local cell and module manufacturers could only supply solar modules to these large
projects. This highlights a significant demand-supply gap in India, which is affecting the growth of the
rooftop C&I market.
Impact of Basic Customs Duty (Tariff Barrier)
BCD is the tax that the central government levies on imported goods to promote the domestic
manufacturing industry. The MNRE announced that the government would levy a BCD on imported
solar cells (25%) and solar modules (40%) from 1 April 2022.
The introduction of the BCD marks a turning point in the pricing of modules. Prices of imported solar
modules have increased substantially, resulting in increased project costs. In 2019, the cost of solar
PV modules was around Rs19.5/Wp (US¢24/Wp), while in 2023, it increased to Rs25/Wp
(US¢30/Wp).15
14
MNRE. Updation of List-l of ALMM. August 2023.
15
JMK Research
Restrictions Due to Open Access
Open access and rooftop solar are currently the two dominant renewable procurement routes for
C&I consumers. Both routes provide long-term certainty of green electricity at a low cost.
States like Maharashtra, Karnataka and Haryana do not allow net metering connectivity to several
C&I consumers availing open access. In such a scenario, C&I consumers are either moving towards
a behind-the-meter (BTM) configuration for setting up a solar project or settling for less profitable
gross metering/net billing mechanisms. Additionally, only CAPEX-based systems are accorded net
metering approvals in these states.
Restrictions on BTM Installations
After imposing restrictions on net metering, DISCOMs now seem to be targeting BTM solar
installations. BTM installations are those where the solar system is on the consumer's side of the
meter, and the consumer uses the electricity generated directly on-site. The excess electricity
generated does not go to the grid and thereby goes waste. Although, this wastage happens because
the BTM capacity estimation is in kWh terms and not on real-time demand i.e., in kW terms. Despite
this BTM can help in adding capacity in rooftop solar system.
Maharashtra and Gujarat DISCOMs are also asking consumers seeking open access
to switch from BTM systems to gross metering, while some other states are denying
approvals for such systems.
Historically, C&I consumers mostly opted for BTM systems because of a lack of net metering
provisions in states’ regulations. C&I consumers in states like Tamil Nadu and Uttar Pradesh that do
not provide net metering were shifting to the BTM system for optimisation. C&I consumers in states
like Maharashtra, Gujarat and Rajasthan were shifting owing to lack of regulatory approvals and
DISCOMs’ resistance.
Maharashtra and Gujarat DISCOMs are also asking consumers seeking open access to switch from
BTM systems to gross metering, while some other states are denying approvals for such systems,
making them financially unviable. In some states, like Rajasthan, DISCOMs have started imposing
electricity duty, additional surcharge (AS) and cross subsidy surcharge (CSS) on BTM systems,
thereby making such systems financially unviable.
State Attractiveness Index for Rooftop Solar C&I

Market in India
In Table 1 below, we analyse various states based on several contributing factors that will impact the
participation of C&I consumers in the rooftop solar market. We assessed the following factors across
states:
• Net metering availability: The existence of net metering provision without any impeding
restrictions enhances the prospect of solar rooftop potential in a state.
• Electricity cost savings: States with higher grid tariffs for C&I consumers translate to higher
electricity cost savings from installing a rooftop project.
• Ease of regulatory approvals: Easier and faster approval of net metering applications by
state authorities is key to the growth of the rooftop solar market in a state.
• Surplus compensation: Compensation for surplus injected power that remains at the end of
the control period enhances the attractiveness of rooftop solar projects.
Table 1: Attractiveness Index of States in Solar Rooftop Installations for C&I Consumers
Percentage Ease of approvals Surplus

S Net metering for
States/UTs savings for C&I process for net compensation Other remarks
no C&I
customers metering payable
Allowed with Rs3.51/kWh

1 Chhattisgarh 30-35% Moderate
restriction (US¢4.2/kWh)
Excess
2 Odisha Allowed 10-15% Moderate generation
lapsed
Excess
Net metering and
3 Punjab 25-30% Moderate generation
net billing allowed
lapsed
Excess
4 Bihar Allowed 40-45% Low generation
lapsed
Rs1.75/kWh
5 Gujarat Allowed 10-15% High
(US¢2.1/kWh)
Net metering and Excess
6 Rajasthan net billing allowed 30-35% Moderate generation Levied grid charges
with restrictions lapsed
Excess Net metering connectivity

Allowed with
7 Haryana 40-45% Moderate generation is denied to consumers
restrictions
lapsed availing open access
Net metering not Not

8 Uttar Pradesh 40-45% Low
allowed applicable
Rs4.51/kWh
9 Delhi Allowed 35-40% High
(US¢5.5/kWh)
Rs4.36/kWh
10 Telangana Allowed 30-35% Moderate
(US¢5.3/kWh)
Andhra Rs4.32/kWh
11 Allowed 30-35% High
Pradesh (US¢5.2/kWh)
1. Net metering
connectivity is denied to
consumers availing open
12 Karnataka 45-50% Moderate access
restrictions (US¢3.4/kWh)
2. Restricts net metering
availability to CAPEX-
based system
Based on 1. Network charges are
Net billing
13 Tamil Nadu 30-35% Low preferential levied on all types of
allowed
tariff consumers
1.Net metering
connectivity is denied to
consumers availing open
14 Maharashtra 50-55% Moderate access
restrictions (US¢3.7/kWh)
2. Restricts net metering
availability to CAPEX-
based system
Madhya Allowed with Rs3.63/kWh
15 30-35% Moderate
Pradesh restrictions (US¢4.4/kWh)
Source: SERCs/JERC, JMK Research
The analysis shows that rooftop solar regulations vary widely across states. There are few states
where the attractiveness across influencing parameters is apt for rooftop solar market growth.
• Gujarat, Delhi, Andhra Pradesh and Telangana have the most favourable ecosystem for
setting up C&I rooftop solar projects. In Maharashtra, owing to its high grid tariffs for C&I
consumers, cost savings will be highest by adopting rooftop solar. However, its unfavourable
regulatory scenario when it comes to approvals and net metering restrictions mars this
favourable parameter.
• Some states do not provide compensation for excess injection of solar power, while in
others, the surplus injection compensation is not attractive enough. Compensation is very low
compared to the current corporate power purchase agreement (PPA) rates of around
Rs5/kWh (US¢6/kWh).
• Even the implementation of net metering has been sluggish, and certain states set arbitrary
constraints and limits. For example, some states do not allow net metering for high-tension
power consumers, i.e., large off-takers of power.
• In most states, there is a cap on the size of the solar plant linked to the distribution
transformer's capacity or connected load capacity under net metering.
• Karnataka has revised its period of compensation for surplus electricity from annual to
monthly, even though most other major states currently have an annual compensation period
for surplus injections of electricity.
Emerging Trends in the Rooftop Solar C&I Sector

The Indian rooftop solar C&I market is continuously seeking innovative solutions to boost the share
of renewable electricity generation within limited on-site/rooftop spaces. Some solutions offer
significant energy generation benefits, while others are viable only in specific scenarios.
The continuous and gradual sectoral shift towards large-sized (>500Wp) and high-efficiency modules
such as bifacials has been ongoing for some time now. In addition, some new trends are shaping up.
They include the adoption of:
• Battery energy storage for rooftop solar
• Virtual net metering

• Peer-to-peer (P2P) energy trading
Adoption of Battery Storage in Rooftop Solar

Battery energy storage systems (BESS) enable the storage of electricity in a battery at a certain time
for use later, depending on the C&I consumer requirements. The Electricity (Rights of Consumers)
Rules, 2020 mandate that consumers must avoid diesel generators as an essential power backup
system and use energy storage technology instead.
According to a report by the Gujarat Energy Research and Management Institute, the capacity of
BESS for rooftop photovoltaic installations can cross 7,000 megawatt hours (MWh)16 by 2030 in
India.
Some of the factors driving battery storage in India are:
• Increasing diesel cost: The country’s diesel genset capacity was about 95GW17 in April
2022 and was only in use as backup power, with an operating cost of about Rs30/kWh
(US¢36/kWh) for the C&I sector. BESS can replace diesel gensets with almost negligible
operating costs and minuscule maintenance.
• Falling battery prices: Batteries play a major role in boosting the adoption rate for BESS as
it is solely dependent on the cost of the battery being viable, which had come down
drastically from US$1,220/kWh in 2010 to US$151/ kWh in 2022, and is expected to fall to
US$59/kWh by 2030.18
16
GERMI. Battery Storage System (BSS)-Rooftop PV (RTPV) Roadmap for India. January 2023.
17
Financial Express. Power supply crunch: Diesel Gensets capacity at close to 100 GW. May 2022.
18
BloombergNEF. Lithium-ion Battery Pack Prices Rise for First Time to an Average of $151/kWh. December 2022.
• Restrictive policies: BESS systems provide a means to absorb excess generation in states
having restrictive net metering policies against C&I consumers. The attractiveness of BESS is
also higher in states that have higher grid tariffs for C&I consumers.
• Increased adoption of Time of Day (ToD) tariff structures: The delta between peak and
non-peak hour tariffs is an important parameter to ensure the financial viability of a BESS
system. Over time, states such as Maharashtra, Tamil Nadu and Karnataka have adopted this
ToD tariff structure. Increased adoption of ToD tariff structure in other states with significant
delta (at least Rs3/kWh) between peak and non-peak hours can play a major role in
developing the C&I BESS market. In June 2023, as part of its latest amendments to the
Electricity (Rights of Consumers) Rules, the Ministry of Power declared that from 1 April
2024, a ToD tariff would be universally applicable to all C&I consumers across India with
demand greater than 10kW. 19 The amendments specify a delta of at least 40% of the base
electricity tariff between peak and non-peak hours.
Adoption of Virtual Net Metering

Virtual net metering is an arrangement in which electricity generated from a solar project installed on
a consumer’s premises or any other location is injected through a solar electricity meter. The
exported electricity is adjusted in one or more than one electricity service connection of the
participating consumer(s) within the same distribution licensee’s supply area.
Rooftop solar has not grown as consistently as utility-scale solar in India and needs a new policy
framework to succeed. Virtual net metering can be an important aspect of such a framework. Virtual
net metering can help bridge the gap between utility-scale solar and rooftop solar as it allows
consumers to plan for high-capacity solar installation and take advantage of economies of scale in
module procurement.
The main benefit of virtual net metering is that it expands the potential pool of stakeholders. By
enabling them to aggregate capacity, it increases the effective availability of sites suitable for
deploying rooftop solar across the country. It achieves this by eliminating policy barriers that may
hinder such participation from stakeholders.
The reasons why virtual net metering can boost rooftop solar installations in India include:
• Smaller connected loads, despite having enough roof space and financial power, compel
consumers to install rooftop solar systems of lower capacities. This applies to warehouses
and domestic consumers in semi-urban areas.
• Consumers with large rooftops with significant loads for installations, but at different
locations, cannot avail the benefits of net metering under current policies. This applies to
large commercial buildings, the Indian Railways, etc.
19
Economic Times. Consumers can now save upto 20% in electricity bills with the new tariff rule. June 2023.
• Virtual net metering expands the scope of net metering benefits by making it applicable to a
larger set of consumers. This is because it helps allocate credits from shared electricity
generation to multiple consumers and allows a single consumer to install a generation
system with higher capacity equivalent to aggregated loads from multiple premises.
Table 2: Various Virtual Net Metering Models and their Applications

Location of generation
Model Consumer Generation Example
and consumption
One-
A consumer generates electricity by installing a rooftop solar plant
to-one Single Single Different
at one location and consumes electricity at a different location.
model
Multiple consumers generate electricity by installing a rooftop
Multiple Single Same solar plant at one location on a common roof and consume at the
same location.
Multiple consumers generate electricity by installing rooftop solar
Multiple Single Different plants at the same location on a common roof and use the
One-
electricity at different locations.
to-
many Multiple consumers generate electricity by installing multiple
model Multiple Multiple Same rooftop solar plants at multiple locations with the same DISCOM
and electricity is used at the same location.
Multiple consumers generate electricity by installing multiple

Multiple Multiple Different rooftop solar plants at multiple locations with the same DISCOM
and electricity is used at different locations of the same DISCOM.
Source: MNRE
Adoption of Peer-to-Peer Trading Mechanisms

Peer-to-peer (P2P) electricity trading is the buying and selling of rooftop solar PV energy between
two or more grid-connected entities. Any excess energy from these entities can be transferred and
sold to other consumers via a secure platform, such as blockchain technology – a digitised,
decentralised, distributed ledger that records all transactions on a P2P network. All the information
transferred via blockchain is encrypted. All involved parties can immediately detect any data
manipulation, which lends transparency and security to the billing mechanism.
Figure 7: P2P Energy Trading
Energy accounting using blockchain
House 1
House 2 House 3
(Prosumer/energy
(Consumer/energy (Consumer/energy
exporter)
importer) importer)
Physical flow of electricity

P2P trading platforms are tailor-made for a complex distribution network like the one in India
because they benefit both consumers and DISCOMs. In India, West Bengal, Uttar Pradesh and Delhi
have successfully implemented pilot projects for P2P trading. Through its renewable energy policy,
Karnataka has also recognised the P2P trading mechanism for future implementation. We highlight
some key benefits of P2P trading for consumers and DISCOMs in Table 3.
Table 3: Benefits of P2P Energy Trading for Prosumers and DISCOMs
Benefit to prosumers/consumers Benefits to DISCOMs
Freedom to choose an energy

Reduction in distribution loss.
supplier
Savings for prosumers or Reduction in procurement of excess solar power via net metering and no buying with net
consumers metering tariffs, which is higher than the average power purchase cost (APPC) for DISCOMs.
Determined tariffs better than net Potential new revenue stream by levying wheeling charges, billing and transaction fees for
or gross metering energy traded in P2P.
Incentives from DISCOMs to

Rapid adoption of smart meters by advocating the usage of blockchain technology will ease
participate in demand side
the metering, billing and collection processes.
management (DSM)
No rooftop capacity limitations –

Voltage and capacity constraint management solution as consumption of rooftop energy in
everyone from smaller players to
the local community can stabilise voltage and reverse flow issues.
large aggregators can join
Balancing local generation and demand through the preparation of buy and sell orders within
the local community.
P2P energy trading can assist DISCOMs in achieving their renewable purchase obligations
(RPO).

Case Study: CESC Ltd’s Pilot Project in Kolkata, West Bengal
To understand the dynamics of P2P trading, Kolkata-based DISCOM CESC, in association with
India Smart Grid Forum (ISGF) and blockchain provider Powerledger, conducted a pilot with
around 1,000 participants (213 prosumers and 788 consumers). The case study aimed to
demonstrate how P2P energy trading provides an opportunity for market-based mechanisms and a
viable alternative to existing net metering schemes. It also looked to determine what value both
CESC and the end consumer would gain.
Table 4: P2P Trading Pilot Project Overview
Parameter Details
Number of participants 1,001 (213 prosumers + 788 consumers)
Energy transacted 7,42,530 MWh
Period of study Four months
Average consumer savings (per month) Rs105,000
Average prosumer savings (per month) Rs312,000
Average reduction in energy rates for consumers 10%
Source: Powerledger, CESC, ISGF, India, 2022

Financing Trends in the Indian Rooftop Solar C&I

Sector
Access to ample financing options for both consumers and rooftop solar developers is critical for the
growth of the rooftop solar C&I sector. Several solar developers have raised substantial funding in
the past decade to aid their rooftop solar portfolio growth. This funding was through debt
(loans/bonds), equity and acquisitions. We summarise some of the most important financing deals in
the Indian rooftop solar market between 2015 and 2023 in Figure 8.
Figure 8: Key Financing Deals in the India Rooftop Solar C&I Sector (2015-2023)
450 391
400 360
Acquisitions
350
300 Equity
US$ million
250 222
200 150
150 100 100 100 100 87 74
100
50
0
Cleanmax (Investor: Warburg
Renew (Investor: Fourth

Cleanmax (Investor: Brookfield
Amplus (Investor: I-squared

Amplus (Investor: Petronas)
Copenhagen Investment
Azure (Investor: Radiance)

Cleanmax (Investor: Augment
Fourth Partner (Investor:
Cleantech (Investor: Shell New

Amp Energy (Investor:
January 2022
June 2021
December 2018
July 2021
August 2015
Partners)
Infrastructure)
Norfund)
Partner)
April 2021
August 2021
April 2019
Renewable)
July 2017
Capital)
June 2023
Energies)
Pincus)
It is evident that there has been a marked reduction in rooftop solar financing in India over the last
couple of years. In 2022 and 2023 (year-to-date (YTD)), there have been only two major deals in this
space: the acquisition of the rooftop solar assets of ReNew Power by Fourth Partner Energy in
January 2022 for around US$87 million and an equity investment of US$360 million by Brookfield in
CleanMax Solar. Notably, the investment by Brookfield is in the overall CleanMax portfolio and
includes both on-site (rooftop) and off-site (open access) project development.
Key players exiting the rooftop solar market altogether (such as Azure Power and ReNew Power)
also indirectly validate the trend of declining investor confidence in the segment. The main factors
contributing to this trend are:
• Investment flows towards open access and utility-scale market: Investors are
increasingly perceiving rooftop solar as a riskier proposition and diverting their funds towards
the relatively safer open access (OA) and utility-scale solar markets. The recently issued
Green Open Access Rules drastically reduced the eligibility for availing OA to 100kW. This
policy has potential to further dent investment interest in the rooftop market, as smaller
consumers, who earlier could only install rooftop solar, will now have access to the OA
market.
• Market saturation: Most creditworthy C&I consumers (BBB+ rating and above) have already
installed rooftop solar systems. The lack of an adequate consumer base is driving developers
and investors away from the rooftop solar segment.
• Regulatory issues: Recently, several states have rescinded benefits to their high-paying C&I
consumers, eventually hindering their adoption of on-site rooftop solar. These include
restrictive net metering provisions, stringent conditions on the maximum solar system size
installed, etc.
With the creditworthy C&I market being almost saturated, several rooftop solar financers have
identified that micro, small and medium-sized enterprises (MSMEs) remain largely untapped. The
MSME sector, thus, offers huge potential for the rooftop solar market in India.
Financing Trends for the MSME Segment

The MSME sector in India encompasses manufacturing entities with turnovers ranging from US$0.61
million to US$30 million. The sector is a critical component of India’s economy, contributing over
30% to India’s gross domestic product (GDP) and 40% to India’s exports.20 Additionally, MSMEs
account for almost half (~48 %) of all the energy consumed in the industrial sector in India.
In the past few years, the MSME sector has undergone a gradual yet clear
behavioural shift towards green energy.
In the past few years, the MSME sector has undergone a gradual yet clear behavioural shift towards
green energy. As a whole, the sector has realised that greening its energy consumption from solar or
any other renewable source is not only important for energy availability but also for profitability and
growth. An on-site rooftop solar plant can help enterprises save a large amount on electricity costs,
which essentially pay off their equated monthly instalments (EMIs) towards the loans for setting up
the solar plant itself. Additionally, a greener energy portfolio leads to lesser greenhouse gas (GHG)
emissions in MSME factory output, which is an attractive proposition to their end clients – usually
large corporates with ambitious emissions reduction targets.
20
Business Today. MSMEs will be a critical sector for pushing India’s growth in next 25 years. February 2023.
Despite MSMEs’ growing desire to use renewable energy, inadequate financing has been a major
roadblock in adopting sustainable energy solutions, such as rooftop solar. Some of the key factors
that have led to this roadblock include:
• Lack of creditworthy MSMEs: The lack of historical financial data and payment track
records, coupled with cases of defaults, make lending institutions apprehensive of giving
MSMEs loans.
• Failure to put up collateral: For large investments, banks generally demand collateral to
reduce lending risks, which MSMEs usually fail to provide. Notably, their existing assets are
already collateralised in several cases, making it difficult for them to obtain loans.
• Long-term uncertainty about MSMEs: At times, it is hard to ascertain the future and
longevity of the business viability of an MSME, leading to increased reluctance from banks to
lend to this segment.
However, in the past couple of years, the rooftop solar financing situation for the MSME segment has
improved. This progress is partly due to increasing awareness of MSMEs towards renewable energy
adoption as well as by lending institutions realising the potential of the untapped market for solar
lending in the MSME segment. This potential is estimated to be around 15GW, which is around 37%
of India’s rooftop solar target of 40GW.21
Consequently, the number of lenders to the MSME segment for rooftop solar have increased
substantially – from around three entities in mid-2021 to nine as of 2023 (see Annexure 1) Of these
nine lenders, seven (except State Bank of India (SBI) and Indian Bank) have issued schemes
catering specifically to the MSME segment.
In the past couple of years, the rooftop solar financing situation for the MSME
segment has improved.
Currently, Tata Power Solar is the most prominent player in MSME rooftop solar financing, either as
a joint fund provider (in the Tata Power - Small Industries Development Bank of India (SIDBI) MSME
scheme) or as an engineering, procurement and construction (EPC) partner (in other schemes). The
loan disbursing entities range from public and private sector banks such as SBI, Union Bank, Yes
Bank, etc. to non-banking financial companies (NBFCs), such as SIDBI, Electronica Finance Limited
and others.
Orb Energy, an integrated solar solutions provider based in Bengaluru, is a unique case of a solar
developer and manufacturer providing financial solutions. Some international investment firms, such
as the United States Agency for International Development (USAID), British International Investment
21
Financial Express. Why MSMEs are hesitant in embracing non-conventional energy sources like rooftop solar. April 2022.
(BII) and others, are also vying to provide financing options to MSMEs interested in rooftop solar
projects.
IEEFA and JMK Research’s previous report provides an in-depth understanding of the financing
landscape for the rooftop solar market in India, including innovative financing solutions. 22
Another major trend is the rise of collateral-free loans for rooftop solar installations for the MSME
segment – of the nine lenders, five provide loans without any collateral. However, some schemes,
such as SBI Surya Shakti and the scheme from Union Bank, require an eligibility condition that the
electricity savings from the rooftop solar plant should at least cover the monthly repayment
obligation towards the loan.
The World Bank is likely to approve and announce a credit guarantee scheme to
limit the risk exposure of financial institutions lending to MSMEs later this year.
In order to limit the risk exposure of financial institutions lending to MSMEs, the World Bank is
working on a credit guarantee mechanism (CGM) scheme. The scheme will involve a US$100 million
payment guarantee fund covering up to 50% of the debt financing amount from participating financial
institutions to a grid-connected rooftop solar project.23 The World Bank is likely to approve and
announce the scheme this year.
22
IEEFA and JMK. Financing Trends in the Commercial and Industrial (C&I) Rooftop Solar Market in India. September 2021.
23
World Bank. Project Information Document. January 2023.
Policy Recommendations
The downfall in rooftop solar capacity until now is largely because of factors such as policy
restrictions, uncertainty surrounding regulations, various unreasonable charges like grid/network
charges and administrative delays in approvals from DISCOMs. Going forward, providing potential
solutions to these issues within this report is important. Therefore, we propose certain clear steps
required from policymakers to address these underlying challenges and aid the next phase of growth
of the rooftop solar market in India.
Central Guidelines for Rooftop Solar Projects

The Green Open Access Rules, 2022 resolved a lot of regulatory uncertainty and enhanced clarity
and uniformity regarding key parameters such as OA charges, banking settlement, approval
processes and timelines.
The central government, through the Ministry of Power or MNRE, can issue similar guidelines for the
rooftop solar market. This can go a long way in addressing industry stakeholders' challenges. The
guidelines should include the following points:
Table 5: Key Parameters Under “Central Guidelines and Rules for Rooftop Solar”
Parameter Description
Instead of uniformly capping rooftop solar systems at 500kW or 1MW capacity for availing net
System size metering benefits, the allowed rooftop solar capacity that a C&I consumer can install should be
dependent on local grid strength such as distribution transformer capacity, sanctioned load, etc.
The net metering approval process should be simplified and the DISCOM’s role should be clearly
Approval process
defined at each step.
Approval duration The connectivity, if pending for a long time – for example, 45 days from the date of the application
– will be termed as “deemed approved” if no clarification is provided.
Regulators must not impose any intrusive charges, such as grid charges, to hinder the growth of
No adhoc charges
the rooftop solar market until government targets are achieved, i.e. by March 2026.
Clearly defined The regulations should clearly define the methodology for surplus injection rates across states.
surplus injection rate They can be linked to system size and average cost of rooftop solar power supply.
New business models Clear official policy directives on innovative rooftop solar business models such as group net
metering, virtual net metering, P2P trading, etc.
Source: Industry Interviews, JMK Research

Define Renewable Purchase Obligation Targets from Distributed

Renewable Energy Systems
Currently, the renewable purchase obligations (RPO) mandate only covers solar and other
renewable technologies without distinguishing the type of solar energy purchased. Thus, the
government can ask obligated entities (such as DISCOMs, large C&I consumers, etc.) to fulfil a
portion of their energy requirements, specifically from distributed renewable energy (DRE) systems,
which can include rooftop solar. This would provide a clear directive and a marker in the form of a
target for developing the rooftop solar market across India.
The government can ask obligated entities to fulfil a portion of their energy
requirements from distributed renewable energy systems, which can include
rooftop solar.
Promote BTM Installations

According to industry interviews, BTM solar installations in India comprise about 20-30% of all
installations at present. This number does not factor in official government installation figures. The
government needs to permit BTM systems across states irrespective of sizing constraints. This is an
important element that can support the next growth phase in the rooftop solar market. This segment,
once recognised, can not only help DISCOMs to accurately forecast their load schedule but will also
help the government achieve its target of 40GW rooftop solar capacity by March 2026.
Conclusion
The rooftop solar market is yet to truly pick up in India. Slow growth in rooftop solar was the key
reason India fell short of its 2022 target of 100GW solar power capacity. Regulatory uncertainties and
lack of support from local DISCOMs have forced prominent developers to either shift their focus to
other segments or exit the market by selling their rooftop solar business vertical. Examples of such
deals include Azure Power selling its rooftop solar business to Radiance in 2021 for around US$74
million and ReNew Power’s US$87 million deal to sell its distributed segment to Fourth Partner
Energy.
Several states are moving away from net metering to lesser beneficial gross metering and net billing
arrangements. The realised revenue and associated benefits for consumers under gross metering
and net billing are significantly lesser than under net metering, leading to C&I consumers shifting
focus to other greening options, such as OA.
The Green Open Access Rules, 2022 drastically reduced the eligibility limit to avail OA to just 100kW
sanctioned load/contract demand. This announcement expanded the scope of OA by giving smaller
C&I consumers accessibility to off-site solar power. Going forward, consumers will shift their
preference from on-site rooftop solar to off-site OA, especially in states like Uttar Pradesh and Tamil
Nadu that have net metering restrictions for C&I consumers.
After a dismal 2022, the first half of 2023 has shown remarkable growth in rooftop
solar capacity additions.
After a dismal 2022, the first half of 2023 has shown remarkable growth in rooftop solar capacity
additions. The 2.7GW installations between January and July 2023 surpassed the entire rooftop solar
capacity additions in 2022. Some of the key influencing factors for this growth are the stabilisation of
project costs and enhanced module availability in 2023. Looking ahead, with solar module costs
continuing to spiral down, a significant uptake in rooftop solar installations is very likely in the near-
to-medium term.
In India, at the state level, Gujarat has long been leading the way in rooftop solar installations, mainly
due to its successful residential policy and the favourable stance of its DISCOMs towards rooftop
solar. Lately, some other states, such as Kerala, Andhra Pradesh and Maharashtra, and the union
territory of Delhi, are increasingly promoting rooftop solar. Kerala’s Agency for New and Renewable
Energy Research and Technology (ANERT) recently announced a systemic plan to install over
700MW of rooftop solar systems in Thiruvananthapuram across the residential, C&I and government
segments. Delhi has the best rooftop solar policy framework, with clear official policy directives on
innovative business models, such as group net metering, virtual net metering, P2P trading, etc.
For developing rooftop solar, other states can look at Delhi for its policy design and emulate Gujarat
for its effective implementation. To improve the accessibility and reach of rooftop solar-based
solutions, states must actively promote innovative business models.
Furthermore, going forward, with several states starting to adopt a ToD pricing mechanism, coupling
rooftop solar with BESS for C&I will make more economic sense. However, the recent uptick in Li-ion
battery prices might delay the BESS adoption trend. Another potential interesting trend will be the
aggregation of smaller-sized rooftop solar projects. In such a case, the entire portfolio of projects,
being treated as a large single entity, can receive better financing terms from rooftop solar lenders.
Also, since the market for creditworthy C&I consumers is saturated, the next growth phase in the
rooftop solar market will likely come from the MSME segment. Recently, with rising awareness about
this market, many new lending agencies have developed products to specifically tap into the MSME
segment and provide collateral-free loans. To mitigate risk exposure of financial institutions lending
to MSMEs for rooftop solar in India, the World Bank is likely to announce a credit guarantee
mechanism scheme with an outlay of US$100 million soon, which will further aid the growth of the
MSME rooftop solar market.
For India to attain its target of 500GW of renewable energy by 2030, solar and its
verticals (including utility-scale, rooftop solar and OA) will all have to play a crucial
role.
For India to attain its target of 500GW of renewable energy by 2030, solar and its verticals (including
utility-scale, rooftop solar and OA) will all have to play a crucial role. As demonstrated by countries
like Germany and Australia, with the right policy and regulatory environment, on-site solar
development can be a game changer to facilitate the organic adoption of solar and greening the
overall national energy mix.
Notably, if India were to achieve the national rooftop solar target of 40GW, it would only contribute to
about 3-4% of the entire energy generation in the country. This figure represents a minuscule
revenue share for DISCOMs. At just about 15GW presently, the rooftop solar market poses no threat
to DISCOMs. States must focus equally on OA and rooftop solar to further their clean energy targets.
With the right policies and support, it is possible to unlock the massive potential of rooftops across
India.
Annexure 1: Financing Schemes Available to the

MSME Segment
(EPC)
Launch Loan disbursing
Name partner Financing details
date entity and type
entity
CIBIL score of borrower > 649
Electricity cost savings should at least cover monthly repayment
obligations.
Tata Loan amount: Up to Rs40 million (US$0.48 million)
SBI Surya January SBI (public sector
Power Project size: Up to 1MW
Shakti 2022 bank)
Solar Repayment period: Up to 10 years
Collateral: Not required.
External benchmark linked rate (linked to RBI repo rate) (MSME):
10.95%total around ~10-11%
Only available to Tata Power MSME consumers
Tata Power
Loan amount: up to Rs25 million (US$0.3 million)
and Small
SIDBI – Project size: 25-500kW
Industries Tata
January Government non- Loan amount: Up to 100% of project cost
Development Power
2021 bank financial Repayment period: Up to five years
Bank of India Solar
company (NBFC) Collateral: Not required
(SIDBI) MSME
Interest rate: 9.1%-10.2%
loan
Loan turnaround time: seven days
Loan amount: No ceiling
Indian Bank Loan amount: Up to 75% of project cost
Indian Bank September
(public sector Repayment period: Up to 15 years
Surya Shakti 2022
bank) Collateral: Solar plant assets, property on which the plant is
constructed
cKers Finance
Loan amount: Rs20 million crores to Rs150 million (US$0.24 million to
US$1.8 million)
cKers Finance,
Repayment period: Up to nine years
USAID Loan Electronica
March EFL
Guarantee Finance Limited
2021 Loan amount: Up to Rs30 million (US$0.36 million) or 75% of project
Program (EFL) (Indian
cost
NBFCs)
Repayment period: Up to four years
Collateral: Not required up to Rs5 million (US$0.06 million)
Loan turnaround time: Three days
CIBIL score of borrower > 700
Electricity savings should at least cover monthly repayment obligations
Loan amount: Rs1 million to Rs80 million (US$0.012 million to US$0.97
Union Union Bank of Tata
November million)
Rooftop Solar India (public Power
2022 Project size: 10kW to 2MW
Scheme sector bank) Solar
Repayment period: Up to 10 years
Down payment: 20%
Collateral: Solar plant assets
Bank of
Loan amount: Rs500,000 to Rs10 million (US$6,057 to US$0.12
Baroda solar Bank of Baroda
November Aerem million)
projects (public sector
2022 Solutions Repayment period: Three to six years
financing bank)
Collateral: Not required
scheme
Tata
Power
Solar,
Yes Bank (private Loan amount: Up to Rs30 million (US$0.36 million)
YES KIRAN May 2023 Goldi
sector bank) Repayment period: Up to six years
Solar,
Loom
Solar
Repayment period: Four or five years

Orb Energy
Orb Energy (solar Collateral: Not required
Solar Finance Orb
2016 energy solutions Down payment: 0 or 25%
for SMEs Energy
provider) Interest rate: 12%
Scheme
Loan turnaround time: seven days
Green Basket
Bond (by Symbiotics
Total outlay for the scheme: US$75 million
British (international
June 2022 The fund targets rooftop solar development in South Asian and African
International investment
countries
Investment platform)
(BII))
Source: News Articles, JMK Research

About JMK Research & Analytics

JMK Research & Analytics provides research and advisory services to Indian and International
clients across Renewables, Electric mobility, and the Battery storage market. www.jmkresearch.com
About IEEFA
The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy
markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse,
sustainable and profitable energy economy. www.ieefa.org
About the Authors

Jyoti Gulia
Jyoti Gulia is the Founder of JMK Research. Jyoti has about 17 years of rich experience in the Indian
renewable sector. Her core expertise includes policy and regulatory advocacy, assessing market
trends, and advising companies on their business strategy. jyoti.gulia@jmkresearch.com
Kapil Gupta
A clean energy sector enthusiast with over 9 years of experience. Kapil's functional exposure
spreads across Business Development, Project Management, Regulatory and Liasoning with Public
and private sector stakeholders. kapil.gupta@jmkresearch.com
Prabhakar Sharma
Prabhakar is a Consultant at JMK Research with expertise in tracking renewable energy and battery
storage sector. He has previously worked with Amplus Solar. prabhakar.sharma@jmkresearch.com
Vibhuti Garg
Vibhuti Garg, Director, South Asia at IEEFA, has advised private and public sector clients on
commercial and market entry strategies, investment diligence on power projects and the impact of
power sector performance on state finances. She also works on international energy governance,
energy transition, energy access, reallocation of fossil fuel subsidy expenditure to clean energy,
energy pricing and tariff reforms. vgarg@ieefa.org
This report is for information and educational purposes only. The Institute for Energy Economics and
Financial Analysis (“IEEFA”) does not provide tax, legal, investment, financial product or accounting advice.
This report is not intended to provide, and should not be relied on for, tax, legal, investment, financial
product or accounting advice. Nothing in this report is intended as investment or financial product advice,
as an offer or solicitation of an offer to buy or sell, or as a recommendation, opinion, endorsement, or
sponsorship of any financial product, class of financial products, security, company, or fund. IEEFA is not
responsible for any investment or other decision made by you. You are responsible for your own investment
research and investment decisions. This report is not meant as a general guide to investing, nor as a source
of any specific or general recommendation or opinion in relation to any financial products. Unless attributed
to others, any opinions expressed are our current opinions only. Certain information presented may have
been provided by third parties. IEEFA believes that such third-party information is reliable, and has checked
public records to verify it where possible, but does not guarantee its accuracy, timeliness or completeness;
and it is subject to change without notice.

IEEFA - JMK - Rooftop Solar Commercial and Industrial Market - August 2023

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IEEFA - JMK - Rooftop Solar Commercial and Industrial Market - August 2023

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The Rooftop Solar Commercial & Industrial Market in India 2

Tables and Figures

Micro, small and medium To spur activity in the rooftop

According to JMK Research-IEEFA’s analysis, states like Gujarat, Andhra

Conducive net metering policies, ease of regulatory approvals and potential

The onus is now on policymakers and regulators to develop solutions to accelerate

Figure 1: Grid-connected Rooftop Solar Installation Trends in India

Annual addition (MW) Cumulative Capacity (MW)

Figure 2: State-wise share in rooftop solar installations (as of 31 July 2023)

Source: MNRE, JMK Research

Figure 3: Breakup of Rooftop Solar Installations (as of 31 March 2023)

Source: JMK Research

Tariff Analysis and Payback

5.0 5.0 5.0 Around 10-20% 5.0

4.5 4.5 4.5

Source: Industry Interviews, JMK Research

4.5 4.5 4.5 4.5 4.5 4.5

Source: JMK Research

Launch of National Portal for Rooftop Solar

Net Metering Limits Revised

Revision in Net Metering Limits by States

Figure 6: Change in Net Metering Limits Across States

Source: JMK Research

Introduction of Net Billing by States

Imposition of Grid Charges by Tamil Nadu and Maharashtra

Sanctioned Load Limits Removed in Gujarat

Frequently changing regulations and the imposition of new charges create

Impact of ALMM (Non-Tariff Barrier)

Impact of Basic Customs Duty (Tariff Barrier)

Restrictions Due to Open Access

Restrictions on BTM Installations

State Attractiveness Index for Rooftop Solar C&I

Percentage Ease of approvals Surplus

Allowed with Rs3.51/kWh

Excess Net metering connectivity

Net metering not Not

Source: SERCs/JERC, JMK Research

Emerging Trends in the Rooftop Solar C&I Sector

• Battery energy storage for rooftop solar

• Virtual net metering

Adoption of Battery Storage in Rooftop Solar

Some of the factors driving battery storage in India are:

Adoption of Virtual Net Metering

Table 2: Various Virtual Net Metering Models and their Applications

Multiple consumers generate electricity by installing multiple

Adoption of Peer-to-Peer Trading Mechanisms

Figure 7: P2P Energy Trading

Energy accounting using blockchain

Physical flow of electricity

Table 3: Benefits of P2P Energy Trading for Prosumers and DISCOMs

Benefit to prosumers/consumers Benefits to DISCOMs

Freedom to choose an energy

Incentives from DISCOMs to

No rooftop capacity limitations –

Source: JMK Research

Case Study: CESC Ltd’s Pilot Project in Kolkata, West Bengal

Table 4: P2P Trading Pilot Project Overview

Number of participants 1,001 (213 prosumers + 788 consumers)