$23bn in rooftop solar potential for India

Bloomberg New Energy Finance has produced a new report which indicates the Indian government will need to invest around $23bn over the next five years if it is to achieve its target of 40 GW in rooftop solar photovoltaics.

The report, entitled Accelerating India’s Clean Energy Transition, published today at the BNEF Future of Energy Summit in Shanghai, examines the trends in India’s rooftop solar, rural mini-grid, off-grid and utility-scale renewable energy segments. India’s government has set its sights on having 175 GW of non-hydro renewables capacity by 2022 (made up of 60 GW onshore wind, 60 GW utility-scale solar, 10 GW bioenergy, 5 GW small hydro and 40GW rooftop solar). At present, this figure stands at just 60GW.
BNEF logo
India wants to make access to electricity universal to its population and is also hoping to tackle increasing demand through capitalising on the abundant, low cost, renewable energy being added to the grid.

The majority of the capacity in the 2022 target ” a total of 135GW ” is utility-scale (wind farms and solar parks, in particular) and does not include large hydro projects. The report estimates that India will need to invest $83bn to build this capacity. The good news is that, because of falling capital costs per MW, that figure is $19bn less than in BNEF’s previous estimates.

But some of the most interesting activity will be in small-scale solar. Shantanu Jaiswal, head of India research at Bloomberg New Energy Finance, said: “Rooftop solar in India will grow inevitably with or without the support of power distribution utilities.”

The cost of electricity from rooftop PV has halved in the last five years due to fierce competition in the market and a drop-in equipment prices. In contrast, average retail electricity rates have increased by 22 per cent in the same period. This has made rooftop PV cheaper than commercial and industrial grid tariffs in all major states in India.

Bloomberg New Energy Finance expects residential sector PV growth to pick up rapidly post-2021. At the moment, its attractiveness is being held back by the high upfront capital expenditure that is necessary, by a shortage of financing options, and the fact that grid electricity is cheaper for residential consumers with low consumption.

“Net metering is a far more important enabler for residential small-scale solar than for business-scale projects,” said Itamar Orlandi, head of frontier markets at Bloomberg New Energy Finance.

Ashish Sethia, head of Asia-Pacific research at Bloomberg New Energy Finance, said: “Growth of rooftop solar presents an opportunity for the distribution companies to diversify and start their own businesses in that area rather than lose customers to other rooftop developers.”

India also has a target of installing 10,000 rural microgrids with a cumulative capacity of 500 MW by 2021. The risk of stranded commissioned assets as a result of grid extension is the biggest concern for investors. That is impeding rapid build-out of small rural grids. Five states in India have released microgrid policies and regulations in the last two years to promote investment and installations in this sector.

No posts to display