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India forecast to achieve record 4 GW of rooftop solar in 2024
13/9/2023
News
India’s rooftop solar market is forecast to add a record 4 GW of capacity in 2024, according to a new joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics.
The report finds that the capacity addition between April and July 2023 was nearly 2 GW, slightly less than the amount added in the full year 2023. Falling solar module costs will likely help sustain the growth momentum in the near-to-medium term, the report finds.
‘For India to attain its target of 500 GW of renewable energy by 2030, solar and its verticals (including utility-scale, rooftop solar and open access) will all have to play a crucial role. As countries like Germany and Australia demonstrate, with the right policy and regulatory environment, rooftop solar can be a game changer for greening the overall national energy mix,’ says the report’s co-author Vibhuti Garg, Director, South Asia, IEEFA.
However, despite the recent growth, the report finds that the rooftop solar market faces significant regulatory challenges.
‘Regulatory uncertainties and lack of support from local electricity distribution companies (discoms) have forced prominent developers to either focus on other segments or exit the rooftop solar business altogether,’ says co-author Jyoti Gulia, Founder, JMK Research.
‘Several states are moving away from net metering to lesser beneficial gross metering and net billing arrangements. This has led to commercial and industrial (C&I) consumers shifting focus to other greening options, such as open access,’ adds co-author Kapil Gupta, Manager, JMK Research.
‘The Green Open Access Rules 2022 gave smaller C&I consumers access to off-site solar power. Going forward, consumers will prefer off-site open access, especially in states like Uttar Pradesh and Tamil Nadu with net metering restrictions for C&I consumers,’ he continues.
The report recommends that policymakers consider creating separate renewable purchase obligations for rooftop solar to boost the market. States should also allow behind-the-meter rooftop solar systems as they can help discoms forecast their load schedule. Finally, the central government should issue uniform regulatory provisions, similar to the Green Open Access Rules.
Meanwhile, the micro, small and medium enterprises (MSME) segment has emerged as a potential growth area for rooftop solar.
This year, the World Bank will likely approve a credit guarantee mechanism, with a $100mn payment guarantee fund covering up to 50% of the debt financing amount from participating financial institutions to a grid-connected rooftop solar project. The scheme could give a fresh impetus to financing for MSME rooftop solar projects. The report recommends strictly enforcing solar procurement targets for accelerating rooftop solutions with MSMEs.
The report also finds that adopting battery energy storage systems (BESS), virtual net metering and peer-to-peer trading will boost the rooftop solar market. ‘As states start to adopt time-of-day pricing, coupling rooftop solar with BESS for C&I will increasingly make more economic sense,’ concludes Gupta.
