Centre’s push accelerates pace of solar installations in houses, claims report

Center's push is speeding up the pace of solar installations in homes, claims report

The increasing need for cost savings and growing awareness of private consumers, as well as strong pressure from the Central Government, is helping to accelerate the pace of rooftop solar installations India‘s residential segment, said a new report from the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics.

Gujarat, Haryana and Maharashtra are the three most attractive states for residential rooftop solar systems.

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“This shows that the potential for residential rooftop solar in India is huge. We expect the growth of residential rooftop solar to accelerate across India in the near future due to strong policy push and resurgent market demand,” states the report co-authors Vibhuti GargDirector, South Asia, IEEFA.

“India’s residential solar segment is on the cusp of a robust growth phase. From the 2 gigawatts (GW) of cumulative installed capacity in FY2022, the residential market is expected to reach 3.2 GW by FY2023.”

In terms of demand-side drivers, the report highlights that there has been a crucial shift in consumer behavior and demand post-Covid-19.

“Lack of consumer awareness has been one of the main barriers to adoption, especially in the pre-Covid era. However, after Covid there has been a sharp increase in demand, supported by an increased awareness of cost savings, the environment, etc.,” says co-author Jyoti GuliaFounder, JMK Research.

“Interestingly, while the pace of solarization of India’s residential segment has been underwhelming, the country has been the world’s cheapest market for residential solar power for about a decade.”

In 2020, the average cost of a residential rooftop solar array in India was US$658 per kilowatt (kW), down 73 percent from 2013 levels. In comparison, in 2020, solar roof solar costs in leading residential markets such as Japan, UK, Switzerland and the US were 3.3 to 6.4 times the cost in India.

The report complements the central government’s recent push by launching a single national digital portal to simplify the process of residential rooftop solar installations and formalizing a direct benefit transfer mechanism will boost capacity expansion.

“The new Central Financial Assistance (CFA) program will allow residential customers to purchase rooftop solar systems from any registered provider of their choice. This expands consumers’ options for quality products and services,” says co-author Prabhakar SharmaSenior Research Associate, JMK Research.

While central government initiatives represent positive developments, the report also notes that some policy hurdles remain at the state level.

For example, state governments must address issues such as delays in approving net metering and properly communicating the benefits of rooftop solar systems. Sometimes, state-owned power distribution companies (DISCOMs) delay subsidy payments to installers and disrupt their working capital flow.

“Regarding the residential solar regulation, all state power distribution companies must issue net metering permits to consumers within a strict and short deadline. In the case of residential rooftop solar panels, DISCOMs must generally be limited to performing two activities: inspecting solar panels and selling the net meters,” says co-author Akhil Thayillam, Senior Research Associate, JMK Research.

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In addition to political hurdles, some other challenges currently facing the residential rooftop solar segment are increasing total system costs (over the last few years) and weak funding support.

To better understand the states that are performing better in attracting residential rooftop solar, the report also provides a nationwide Residential Rooftop Solar Attractiveness Index.