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Renew | July 2016

Yet to Gain Momentum

Against rooftop solar power´s economic potential of 210 GW in the country, only 525 MW is being tapped. That way, it has a long way to go.
With a target to provide round-the-clock electricity across the country by 2019, Prime Minister Narendra Modi and his Power Minister Piyush Goyal have put power on top of the agenda for the country. However, when India announced in mid-2015, just ahead of the recent COP21 Climate Conference in Paris, that it was aiming to source 40 per cent of its energy from alternative sources by 2030, the direction of thrust of the power sector in the coming one-and-a-half decade was firmly set - tapping the vast potential of renewable energy sources, with major thrust on solar.

The Prime Minister´s ambitious target of installation of 40 GW (or 100,000 MW) of grid-connected solar rooftop power plants by 2022, has prompted several industries, commercial establishments and individuals to start tapping this localised source of energy. India has announced a target to set up 175-GW of new capacity from renewable energy sources by 2022, including 100 GW from Solar and 60 GW from wind, as part of its commitment at the Paris Summit held in December 2015.

´Though a very ambitious target, it is clearly a great opportunity for users as well as system integrators to avail the benefits and strive to work towards building up capabilities and meet the expectations,´ says N R Khushalani, Vice President, Polycab Wires Pvt.Ltd.

India has pledged to reduce its green house gas (GHG) emissions intensity - the ratio between a country´s gross emissions to its gross domestic product (GDP) at a particular point - by 33-35 per cent by 2030, compared to 2005 levels. For this, India announced that it will ensure about 40 per cent of its electricity comes from non-fossil fuel sources. The thrust to renewable energy sources aims at achieving this objective.

Power shortage and outages are a common phenomenon in India. This has been forcing commercial and office establishments to opt for diesel generator backup, which is neither cost-effective nor environment friendly. Besides, over 300 million people or a quarter of the country´s population is estimated to have no access to power for various reasons, including being at remote locations, making grid accessibility uneconomical mostly.

Advantages
Solar systems can be installed on rooftops of residential, commercial, institutional and industrial buildings and the electricity generated could be fed into the grid at regulated feed-in tariffs or used for self consumption with net-metering approach.

The grid-connected rooftop solar installations are gaining prominence in India, of late, as it is the cheapest even among various solar plant systems. It is also clean, green and the best suited for India, besides being a segment that does away with transmission function out of the power supply stream and reducing transmission and distribution losses to the bare minimum. Thus, it is a competitive alternative to mainstream electricity. However, coal remains the mainstay of India´s power sector.

The key advantages of solar Rooftop installations listed by the Ministry of New and Renewable Energy (MNRE) include savings in transmission and distribution losses, low gestation time for installation, no requirement of additional land, improvement of tail-end grid voltages and reduction in system congestion with higher self-consumption of solar electricity, local employment generation, reduction of power bill by supplying surplus electricity to local electricity supplier and battery elimination makes easy installation and reduced cost of system.

Potential & Policy
Despite having the technical potential of 352 GW, of which only 210 GW are economically viable, only 124 GW of that has the market potential to attract SPV fund raising, that is commercial viability, according to MNRE. However, only 525 MW of solar rooftop systems were in operation by October 2015.

The Centre is offering concessions in custom duty and excise duty and accelerated depreciation, besides subsidy/ central financial assistance (CFA) of 15 per cent, while the state governments are offering fiscal and other concessions. States are now rushing in to encourage rooftop solar Installations by offering subsidies, making it mandatory for all power guzzling organisations to compulsorily invest in renewable energy generation. Thirteen states have come out with solar policy supporting grid connected rooftop systems at end-June 2015. They are, Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Karnataka, Kerala, Manipur, Punjab, Rajasthan, Uttar Pradesh, Tamil Nadu, Uttarakhand and West Bengal.

Net metering (that captures two-way flow of power -û to and from grid) being introduced in many states is a way forward towards encouraging users to adopt solar power/renewable energy. State Electricity Regulatory Commissions (SERCs) of 19 states or union territories (UTs) have notified regulations for net metering/feed-in-tariff mechanism. They are Andhra Pradesh, Chhattisgarh, Delhi, Haryana, Karnataka, Kerala, Tamil Nadu, Uttarakhand, West Bengal, Andaman & Nicobar, Chandigarh, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep, Pondicherry, Goa, UP, Rajasthan and Odisha. The following states were yet to notify regulations and policy for grid connected rooftop systems at end-June 2015: Arunachal Pradesh, Bihar, Himachal Pradesh, Jammu & Kashmir, Gujarat, Jharkhand, Telangana, Assam, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim and Tripura.

The increasing focus on Clean Energy supported by the government is the major driver for solar rooftop market in India. The renewable purchase obligation for power utilities companies, bulk consumers of electricity etc., will result in installation of solar plants in the country to ensure adequate supply to the obligated entities. The viability gap funding of renewable energy projects will provide a big impetus to the rooftop solar projects, increasing the viability of the projects.

Centre´s initiatives
The Centre has chalked out state-wise and year-wise targets for achieving 40,000 GW of grid-connected rooftop solar power by 2022. Maharashtra leads the pack with 4.7 GW of target, followed by Uttar Pradesh (with a target of 4.3 GW), Tamil Nadu (3.5 GW) and Gujarat (3.2 GW). The growth in proposed installations is planned in a telescopic pattern, starting with 0.2 GW in 2015-16 to 9 GW of installations in 2021-22 in the country.

An estimated 10.8 GW capacity is expected to be added in 2016-17, the Ministry of New and Renewable Energy (MNRE) document stated. A huge portion of this capacity is expected to be added through the Central Government policies, while states would continue to play catch-up. The MNRE estimates that around 4.3 GW of capacity would have been added in financial year 2015-û2016, taking the new installations to around 19 GW by March 2017.

A total of 9,244 MW solar power capacity is expected to be added under the Central Government policies, while 1,615 MW capacity is expected to be added under the state solar power policies.

The total rooftop solar potential of all the Central Government ministries´ buildings is estimated at 7196.4 MW. MNRE has sanctioned 360.81 MW of these solar rooftop projects and 54.187 MW are in operation.

Pay for use
Stating that for the residential sector, a tailor-made solution works better than a plug-and-play kind of a solution, Prasad Chaporkar, International Business - Marketing Head, Waaree Energies Ltd says, ´The power consumption pattern of households varies a lot and the amount of space available on their roofs also varies. On top of that, every household would have a different budget for investing in a solar power system.´ From a householder´s perspective, certainty about a predictable cash outflow for his power consumption over a long period is vital.

Khushalani feels that pay for usage would be an ideal situation for end-users. ´This would any time be price-effective for the end-users who does not have to invest in these small power plants and is provided flexible power as and when required on demand,´ he said. For such systems, the payback period depends on the percentage of usage of power and time. ´It can vary anytime between five to seven years,´ he added. There are several companies which are offering these ´pay as you use´ kind of rooftop solar installations in the country.

Challenges
However, the major hurdle in growth of rooftop solar projects, particularly in residential space, is the lack of proper energy storage technology, which is cheaper and lasting longer. The solar power is an intermittent source of energy and it is generated during the day time when solar irradiations are high. The power generated must be consumed as soon as possible as the current energy storage technologies are not economically viable. These are the reasons for the Centre to encourage rooftop solar with grid connectivity in the country. But, net metering is yet to evolve. Net metering enables tracking of inflow and outflow to the grid, so net billing based on net consumption or supply by the rooftop solar operator/ user can be prepared.

Bank financing is another irritant for the rooftop projects. The Department of Financial Services has advised all Public Sector Banks to provide loans for grid connected rooftop solar systems as home loan/ home improvement loan.´However, it is yet to be made effective at field level as no branches of these banks are providing such loans,´ is the comment by the government agencies themselves.

-´The major cost component of a solar project is the solar PV Panels. With continuous technological innovations in PV panel efficiencies we will find a fair amount of cost reduction in this component of the solar power generation chain,´ says Khushalani. However, the recent news that MNRE is expected to receive low-cost debt funding worth $2.5 billion (about Rs 16,500 crore) from several international development banks, for its rooftop solar power program, is boosting expectation on the growth prospects of this segment. The World Bank has committed $620 million, while the Asian Development Bank and BRICS New Development Bank have pledged to provide $500 million and $250 million, respectively. The German development bank KfW has provided $100 million, and negotiations for $1.14 billion worth of funding are underway.

These funds would be made available to retail and commercial banks in India, from whom project developers would be able to secure loans at low interest rates.

Conclusion
We may witness a steep growth of installed capacities during the next six years as each institution/ industry and commercial establishment invests in solar power generation on its own. Though 4.8 GW of new capacities are planned to be installed during the current fiscal, it is unlikely to achieve the target, given the slow pace of activity in the segment. That means the Centre and states have to put in extra efforts for convincing the stakeholders about the benefits of rooft top solar plants. Kushalani sees real pick-up in pave coming only during 2019-20.

Easy and hassle-free loan dispensation to end users who wish to install such solar power generation will go a long way in encouraging many to invest in these plants.

Though the industry suffers from lack of technical manpower to service the equipment like panels and investors, it is expected to evolve with the spawning of plants across the country.

General awareness is a key factor in promoting the use of solar power across all sectors and residential sector in particular. One could only hope that the government´s efforts through its agencies to propagate these things will bear fruit.

Residential rooftop solar installations are slowly gaining prominence in India. Being a competitive alternative to mainstream electricity, it is expected to become quite successful over the next few years.

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