Govt Should Relax DCR Mandate Temporarily For PM Surya Ghar: IEEFA

2024: PMSGY Boosts Rooftop Solar Capacity By Over 50% In Six Months

A latest report from the International Energy Economics and Financial Analysis (IEEFA) and JMK Research advocated for temporarily relaxing the mandate of Domestic Content Requirement (DCR) under PM Surya Ghar scheme. The suggestion was one of the key recommendations of the joint report which analysed the performance and challenges under PM Surya Ghar scheme. The report said that until adequate supply of DCR solar cells are available domestically, this mandate could be relaxed.

“The Government of India must consider temporarily relaxing the mandatory usage of DCR modules until the enabling ecosystem of domestic PV cell manufacturing develops,” the report advocated.

In its other recommendations, the report said, “A firm policy and regulatory framework support should be reflected in its implementation to build a resilient and vibrant decentralised energy ecosystem with residential rooftop solar at the forefront. The technical issues and glitches of the National Portal for Rooftop Solar (NPRS), which several users across India have reported, must be resolved immediately. The state government must upgrade the endpoint transmission infrastructure, including the locality distribution transformer and power feeders. The Ministry of Power (MoP) directive to automatically award feasibility approval for project capacities under 10kWp should be implemented across India.”

The rooftop solar market in India, which consists of the residential, commercial, industrial (C&I), and government segments, has seen substantial growth. As of March 2024, India added 3.2 gigawatts (GW), representing 27% of the total rooftop solar installations in the country. About three-quarters of this capacity is located in Gujarat.

The central government’s plan to transform India’s rooftops into a vast solar resource to secure the nation’s energy independence is ambitious and commendable, as per IEEFA and JMK report recent findings. The report stated, the country made slow progress until the launch of the Pradhan Mantri Surya Ghar Yojana (PMSGY) in February 2024. This new scheme is a significant leap toward India’s solar future, increasing the country’s rooftop solar capacity by more than 50% in just six months. Yet, critical pieces are still missing from the renewable energy mix before the dream of delivering solar power for all becomes a reality.

In comparison to C&I, the uptake of rooftop solar in the residential sector has been relatively underwhelming. As of March 2024, the residential rooftop solar installed capacity was about 3.2 GW, or 27% of the total rooftop solar installations in India, with Gujarat accounting for a significant portion of this capacity, the report said.

Key Insights from the Analysis:

• Leading States: Uttar Pradesh, Assam, Maharashtra, Delhi, and Madhya Pradesh are India’s top five states for residential rooftop solar power. Three of these states (Uttar Pradesh, Assam, and Delhi) offer additional state subsidies beyond the Central Financial Assistance (CFA).
• Grid Tariffs: In some states, higher grid tariffs increase the attractiveness of residential rooftop solar. For instance, Maharashtra has India’s highest domestic electricity tariff for households consuming 300-500 units per month.
• Subsidy Removal: The removal of state subsidies in states like Gujarat and Haryana has negatively impacted their overall ranking. Despite the low electricity tariffs and absence of subsidies in Gujarat, its supportive ecosystem and state policies make it an attractive market for residential rooftop solar.
• Assam’s Emergence: Assam is becoming a leading state for residential rooftop solar, with the highest number of active applications on the National Portal for Rooftop Solar (NPRS), driven by additional subsidies and strong government support.
• Challenges in Jharkhand and Bihar: Jharkhand and Bihar rank the lowest in residential rooftop solar development. In Jharkhand, there is a disconnect between a strong policy framework and other parameters like cost savings and implementation.

Sources: MNRE, JMK Research

Vibhuti Garg, Director – South Asia at IEEFA, said: “The growth of the decentralized energy market in India, with rooftop solar as a crucial component, is vital to achieving energy independence and security. With annual targets of 8-10 GW under PMSGY, rooftop solar will play a key role in helping India reach its overall renewable energy goal of 500 GW by 2030.”

Prabhakar Sharma, Senior Consultant at JMK Research, notes: “Differing regulations across states and their varying interpretations by state DISCOMs remain a challenge. Supply-side support is also lacking in the underdeveloped and overpriced Domestic Content Requirement (DCR) modules market. Technical issues, such as NPRS glitches and weak distribution infrastructure, further dampen consumer confidence.”

bright future for the country’s decentralised energy market

Gaurav Upadhyay, Energy Finance Analyst – India Sustainable Finance at IEEFA, added: “Residential rooftop solar is a win-win scenario, leading to significant savings for consumers and state DISCOMs by reducing cross-subsidization costs and technical losses. To realize the immense potential of solar energy on Indian rooftops, collaboration between regulators, distributors, financiers, EPC companies, developers, and consumers is crucial to building a vibrant and resilient decentralized energy ecosystem in India.”