On-site PV projects have taken off and are now the fastest-growing renewable market segment. According to Bloomberg New Energy Finance (BNEF), total installed rooftop PV capacity has hit 1.3 GW and, in the last year, more rooftop systems have been added than in the past four years put together.
In addition, rooftop solar power for commercial and industrial facilities is now cheaper than grid power. 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.
Meanwhile, state power distribution companies (discoms) are incentivized to adopt rooftop solar after the central government’s mid-December proposal to subsidize their doing so to the tune of $3.7bn.
In October the Clean Energy Access Network (CLEAN), India’s industry body representing the decentralized renewables sector, launched its first annual ‘State of the Sector’ report. It found that private-sector market leaders deployed 206 small energy grids (picogrids, microgrids and mini-grids); more than 92,000 solar home systems; 1300 solar water pumps and 3.6 million solar lanterns.
And beyond residential use, it found that 144 industrial projects – such as agricultural processing, small-scale manufacturing, ICT and cold storage – are powered by distributed renewables.
Solar water pumps for agricultural use gained notably in 2017 with around 128,000 installed, up from 2016’s 43,000. According to BNEF, about eight million diesel-powered water pumps could feasibly be replaced with solar and the central government has targeted the installation of one million by 2021.
However, in a November report titled Accelerating India’s Clean Energy Transition, BNEF warned that despite record growth, India’s rooftop PV targets are ultimately “unachievable”, with only 3 per cent of the government’s hoped-for 40 GW installed to date. In order to achieve this target, new installations would need to double annually to 2022.
BNEF said the government could step up growth in the rooftop PV segment by changing two things about the market: simplifying the process for net metering, which could shift the focus from industrial and commercial to residential customers, and by improving access to debt, which would reverse the current trend of self-funding.
Finally, BNEF concluded that India will need to invest around $23bn over the next five years if it is to achieve its rooftop solar target.
Image: A rooftop solar plant installed by Mera Gao Power in Uttar Pradesh. Credit: Anna da Costa