Solar Rooftop Opportunities and Challenges
Solar Rooftop Opportunities and Challenges
Solar Rooftop Opportunities and Challenges
has announced a target of 100 GW of solar energy generation capacity by 2022 out of which 40 GW is
expected to be achieved through decentralized and rooftop scale solar projects.
An SPV rooftop system consists of solar panels installed on the roof of any residential, commercial,
institutional and industrial buildings for generation of electricity. There can be two types of SPV
rooftop systems: (i) SPV rooftop system with storage facility and (ii) Grid connected SPV rooftop
system.
• SPV rooftop system with storage facility: Such rooftop systems use a battery for storage of power.
This can be utilized even during night when the sun is not available.
• Grid connected SPV rooftop system: In a grid connected rooftop system, the DC power generated
from SPV panel is converted to AC power using power conditioning unit and it is fed to the grid.
These systems generate power during the day time which is utilized fully for powering captive loads
and excess power is fed to the grid. In case solar power is not sufficient due to reasons like cloud
cover, the captive loads are served by drawing power from the grid. The grid connected SPV
rooftop systems can work on net-metering basis or gross metering.
In a net-metering basis system, surplus power generated after captive consumption is transferred to
the grid at a pre-determined tariff. In a Gross metering system, the government offers a tariff for
purchase of the entire solar power generated from such plants. However, unit cost of electricity
generated from such SPV rooftop systems will be higher compared to large scale projects and hence
power purchase from small plants might not be preferred by utilities for fulfilling their renewable
power purchase obligations.
GROWTH DRIVERS FOR SPV ROOFTOP SYSTEMS GLOBALLY AND ITS PROSPECTS IN INDIA
The global PV installed capacity reached more than 100GW till 2013 with large capacities of PV installations in
countries like Australia, China, Germany, Italy, Japan, Spain and USA. Major SPV installations in countries like
Germany, Japan and USA have been on rooftops. As depicted in the graph below, for the six countries with
leading PV installations, rooftop installation forms about 56% of the total PV installation.
SPV rooftop installations in these countries have been driven by incentives offered through various schemes
leading to faster parity compared with conventional power tariffs which facilitated growth.
India has advantage in terms of higher solar irradiation compared to these countries. As per report published
by the Ministry of New and Renewable Energy (MNRE), the residential segment in India has a potential for
25,000 MW of SPV rooftop systems considering average rooftop system of 1-3 kW capacity. If we include
commercial buildings, shopping complexes and offices, it can further translate in to huge potential for SPV
rooftop systems in India.
[Country wise solar irradiation data]
The Government of India launched JNNSM in 2010 to promote solar energy in India and Phase I (2010-13) of it
was largely focused on large-scale grid connected solar power projects. But, India has lagged behind in the
deployment of SPV rooftop system due to lack of distinct policy framework and infrastructure support to
address requirement of small scale decentralized SPV rooftop systems. Subsequently, the Government of India
has also recognized the importance to promote SPV rooftop system in Phase II of JNNSM and various states
have also announced policy to encourage installation of SPV rooftop systems as discussed in subsequent
sections.
The Government of India initiated JNNSM under the purview of NAPCC with an objective to promote
ecologically sustainable growth and at the same time address the country’s energy security challenges. Phase I
(2010-2013) of JNNSM focused largely on ground-mounted grid connected solar projects where as under
phase II (2013-2017), government has put emphasis on off-grid and decentralized solar applications with an
The Ministry of Finance has issued an advisory to all public sector banks to encourage home loan/ home
improvement loan seekers to install SPV rooftop systems and include the cost of such equipment in their
home loan proposals. Eight public sector banks have already issued instructions to its branches for the same.
Salient features of MNRE scheme for off-grid & decentralized solar applications
• Central Financial Assistance (CFA) up to 15% of the benchmark cost (fixed by MNRE on yearly/half yearly
basis) will be provided by MNRE for grid connected rooftop and small solar power plants as per revised
guidelines issued in January 2015.
• In some special category States/Union Territories like Sikkim, Jammu & Kashmir, Himachal Pradesh,
Uttarakhand, Lakshadweep and North Eastern states, CFA up to 70% can be provided.
• Various agencies like state nodal agencies, Solar Energy Corporation of India (SECI) and channel partners
(vendors/suppliers of solar equipment, system integrators, project developers, renewable energy service
providing companies, etc.) will be involved in program implementation for rapid up-scaling.
• Provisions like accelerated depreciation, tax holiday and concessional import duty/ excise duty exemption
are provided by the government for grid connected SPV rooftop projects.
• MNRE has also suggested various business models like solar installations owned by consumer/ owned,
operated and maintained by third party/ owned by the utility for smooth operation of rooftop and small
solar power plants.
• 360.81 MW of grid-interactive SPV rooftop projects have been sanctioned under MNRE Rooftop Scheme as
on April 20, 2015.
• Majority of the states have adopted net metering policy over FiT for SPV rooftop systems as it focuses
more on self-consumption and energy banking instead of selling power to utilities.
• Excess generation is either not paid for or is paid at APPC or can be banked for a limited period.
• More than 285 MW of SPV rooftop projects have already been commissioned across various states in India
which included 35.9 MW under MNRE scheme.
• Tamil Nadu, Gujarat and Karnataka are the leading states in terms of rooftop installations.
• Commercial power tariffs are higher in states like Tamil Nadu, Andhra Pradesh, Karnataka and Kerala for
commercial and industrial user segment and hence the solar power produced at the location of
consumption is already at par with commercial tariffs. Furthermore, commercial and industrial users can
also avail accelerated depreciation benefits on grid interactive SPV rooftop systems.
• States like Tamil Nadu have witnessed higher SPV rooftop installations due to power shortage, parity of
solar power with commercial rates for industrial segment as well as incentives from state government
whereas installations in power surplus states like Gujarat are being driven by incentivising tariffs and
providing long term Power Purchase Agreements (PPAs) under Public Private Partnership (PPP) model.
CHALLENGES
Despite incentives from central and state governments, many challenges exist for development of SPV rooftop
market. Some of these are:
• High upfront cost involved in putting up solar panels on rooftops though PV module prices have declined
by about 50% globally since 2011. Cost of PV module forms about 50% of the SPV rooftop cost and
presently installation of 1 kW costs around Rs. 1 Lakh without battery back-up and without considering any
subsidy. Hence, cost remains higher for many consumers (especially house hold)
• Cost of assembly parts such as batteries, inverters etc. for power storage
• Power from multiple small solar projects poses challenge to grid stability
• Apprehensions in financing solar projects mainly due to limited track record in India
• Limitations in FiT approach due to issues of monitoring & verification to avoid misuse of system from
feeding subsidised fuels
• Lack of technical specification like voltage, flicker, and synchronization for net-metering system
• Challenges with respect to grid integration with likelihood of reversal of power flow across the network
and erratic behaviour of low voltage protection systems.
• Lack of awareness among consumers
Globally, major PV installations have been on rooftops in countries like Germany, Japan and USA. Given the
global trend, high solar irradiation, growing energy demand & power deficit issue and abundance of rooftops
for SPV systems installation, SPV rooftop system seems a logical alternative choice to meet India’s energy
requirements.
Solar power has already achieved parity with commercial power tariffs for industrial and commercial segment
in many states in India. However, SPV rooftop installations are at very nascent stage in India as against
targeted SPV rooftop installations of 40 GW by 2022 and hence, capital subsidy alone may not be the solution
to achieve targeted installations but comprehensive solar solutions is the need of the hour.
Implementation of SPV rooftop systems can be accelerated if solar solutions are easily available and accessible
as a complete package; easy financial assistance is available and there is increasing awareness amongst
consumers about its economic/environmental benefits. Promoting SPV rooftop for self-consumption could be
the most important step towards popularising SPV rooftop. Large participation across the consumer segment
may be achieved through creating awareness about benefits supported by synchronisation between stake
holders i e Government nodal agencies, consumers and system integrators.
Furthermore, government policies should also put emphasis on encouraging power generation through
decentralised SPV rooftop systems at the point of consumption rather than only providing capital subsidy. One
of the ways could be through providing generation based incentives for end-users including the house hold
segment which can drive growth of SPV rooftop systems without putting any additional burden on distribution
and transmission infrastructure while at the same time achieving targets for renewable energy installations.
Contact:
Vishal Joshi Anuja Parikh
Manager Analyst
vishal.joshi@careratings.com anuja.parikh@careratings.com
91-79-40265613 91-79-40265616
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