Solar rooftop capacity sees record addition, ground-mounted lags behind

India’s solar power sector is seeing two parallel capacity addition movements, the pace of which are neither connected nor bring in any predictability to the government’s renewable energy target. One is the traditional ground-mounted utility-scale solar systems that put their entire power into the grid; the other is rooftop generation, that can be either standalone or connected to the grid.

India is aiming to install 100 Gw of solar power by 2022, of which 40 Gw is to come from solar rooftop. Over the past year, it is solar rooftop installations that have seen a record addition, with large-scale ground-mounted installations facing challenges ranging from the abrogation of power purchase agreements by state electricity boards, land acquisition, payment issues and increase in safeguard duty on panel imports.

As of May 31, 2019, India’s installed solar power capacity was 29.4 Gw out of a total renewable capacity of 79 Gw. According to a report of Bridge to India, a renewable energy consultancy, the country is estimated to have added a record 1,836 Mw (1,000 Mw = 1Gw of rooftop solar capacity in FY 2019, taking the total to 4,375 Mw. This is still just 15 per cent of solar power generation but as the Bridge to India report points out, “Rooftop solar continues to grow rapidly, registering a growth rate of 61 per cent over the previous financial year." Maharashtra (618 Mw), Rajasthan (393 Mw), Tamil Nadu (365 Mw), Gujarat (314 MW) and Karnataka (298 Mw) are the top rooftop solar power-generating states.

This pace in harnessing solar energy on the roof itself is in contrast to utility-scale grid-connected solar, where Bridge to India data show that capacity addition fell to 4,810 Mw in FY2019, a steep fall of 47 per cent over the previous year. As on March 31, 2019, another 17,887 Mw of utility scale solar projects were under various stages of execution.

To be sure, at least part of the reason for the surge in rooftop solar is the low base. Nonetheless, there has been a surge in rooftop capacity addition, both from the government and individual companies and organisations that are focused on reducing their carbon footprint.

According to Energy Economics & Financial Analysis (IEEFA), a philanthropic venture fund focused on clean energy, though India installed 28 Gw of solar capacity as of March 2019, a fourfold increase in less than three years, the share of rooftop solar was just 14 per cent of the cumulative solar installation in India, reaching 3,855 Mw by December 2018. This is far away from the envisaged 40 per cent share. Madhya Pradesh’s recent experience points to some of the challenges.  

After taking up the ultra-mega Rewa solar park with a combined capacity of 750 Mw, Madhya Pradesh embarked on a solar rooftop programme last year, under which government buildings, universities and institutes were bid out for solar rooftop contracts on a Resco (renewable energy supply company) model, where the customer neither owns the system nor makes any investment. The rooftop plant is put up and operated by a Resco developer. “The reason the rooftop model picked up was that the tariffs that emerged were very low,” explains Manu Srivastava, principal secretary, renewable energy, government of Madhya Pradesh,. The state discovered Rs 1.38 -2.17/kWh (net of capital subsidies) in its 8.6 Mw solar rooftop auction held in October 2018. This was far lower than tariffs discovered earlier. In 2012, a Central Electricity Regulatory Commission guideline had estimated cost of building a 1 Mw plant at Rs 8 crore, from Rs 16.9 crore in 2010-11. This translated to power cost of Rs 7-8 per KWh. In 2016-17, the cost was again notified higher at Rs 12 crore for 1 Mw. More recently in April 2019, Solar Energy Corporation capped rooftop solar tariffs in the range of Rs 2.5 to Rs 3.5 per Kwh.

Srivastava, however, says there are more regulatory challenges in rooftop solar projects because the developer is “standing against the distribution company” by taking away part of its business. "The electricity bill of buildings tend to be reduced by one third in some cases. So roof-top generation by customers makes sense only when a discom suffers a power deficit,” he explains.

For Srivastava and his team the efforts required for the 750 Mw-Rewa project is the same as that for 75 Mw of rooftop generation. “Every building is a challenge. You need different permissions from a host of organisations. But in our (rooftop) tenders we were able to bring in some innovation from Rewa to make them more attractive,” he says.

For instance, the concept of partial commissioning was introduced in cases where same compound had more than one building. A payment security mechanism put in place for the Rewa solar park was also used in the rooftop project. Besides, there were clauses like right to substitution and change of law in the contracts.

So will solar rooftop generation meet its 2022 target? IEEFA’s reports says there has been significant investment and 

“learning by doing” in the rooftop sector, which is necessary to prepare a positive regulatory framework and upskill the workforce for small-scale deployments, as well as educating the market on this relatively new technology. It estimates that for the next three years, rooftop solar installs will grow at a CAGR of 50 per cent, suggesting a cumulative 13 Gw  of installed capacity by 2021-22, which is still some distance from the 40 Gw share. But Srivastava says India needs to do both ground-mounted grid-connected large-scale projects as well as rooftop ones. “It is not a question of either-or. At the same time, the ratio of 60:40 won't work. It is more realistic to have 85:15,” he says.

Though states like Delhi, Bihar and Haryana, too, have started solar rooftop programmes, any shortfall in this segment, especially at a time when utility-scale capacity addition has started to slow down, will adversely impact India’s target of 100 Gw of solar target.