4GW Rooftop Solar Capacity In India Likely By 2024 End: IEEFA Report

4GW Rooftop Solar Capacity In India Likely By 2024 End: IEEFA Report

A latest report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics claimed that India’s rooftop solar market is likely to add a record 4 Gigawatt (GW) of capacity in the fiscal year of 2024. The report claimed that the sector is on its way to overcoming several major roadblocks. 

The IEEFA report claimed that the capacity addition between April and July 2023 was nearly 2GW, slightly less than the amount added in FY2023. The report claimed that declining solar PV costs could fuel the sector’s growth in the near to medium term. 

“For India to attain its target of 500GW 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,” Vibhuti Garg, Co-author of the report and Director, South Asia, IEEFA said. 

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“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,” she added. 

Despite the recent growth, the report finds that the rooftop solar market faces significant regulatory challenges. 

As per the report, Gujarat, Andhra Pradesh Telangana, and the union territory of Delhi have the most favourable ecosystems for commercial & industrial (C&I) customers setting up rooftop solar projects. But, several other states need to push rooftop solar.  

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The authors claimed that several states are moving away from net metering to less beneficial gross metering and net billing arrangements. This has led to C&I consumers shifting focus to other greening options, such as open access.

They also attributed this to the Green Open Access Rules, 2022. This, they said, gave the smaller C&I consumers access to off-site solar power. The authors claimed that consumers would prefer off-site open access going forward, especially in states like Uttar Pradesh and Tamil Nadu, with net metering restrictions for C&I consumers. 

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,” the report said. 

The report said that the micro, small and medium enterprises (MSME) segment has emerged as a potential growth area for rooftop solar. In recent years, rooftop solar financing for MSMEs has improved as lenders realize the segment’s potential and develop products tailored to its needs. 

“This year, the World Bank will likely approve and announce a credit guarantee mechanism, with a US$100 million 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 will likely give a fresh impetus to financing for MSME rooftop solar projects,” the authors said. 

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,” the authors said.