When Varun Goenka, 32, landed in Delhi a few years ago to study BCom at Delhi University, little did he know what was in store for him. Life could have indeed been very different had he considered joining his father's garment retail business in Guwahati.
In January 2014, Goenka realised he could make a fast buck by installing solar grids on rooftops at petrol pumps, something that his father's business could never match up to. He took seed money of Rs 50 lakh from his relatives, the Rajgarhia family, who runs courier company Overnight Express, and started Atlanta Energy. In March 2015, he closed his books with Rs 4 crore in revenues. In the next three years Goenka has set a target of Rs 150 crore. "There's a huge segment which has money but is energy deprived. I am just catering to them," he told BT.
Like Goenka, Abhinav Gupta too walked away from his father's steel business in Ghaziabad, to cater to the solar power requirements of commercial, industrial and utility players with Sun Switch.
Power Minister Piyush Goyal is looking at entrepreneurs like Goenka and Gupta to realise his dream of 40 GW of grid-connected rooftop solar systems . The target is to reach 10 GW by end of 2017/18.
"With this (rooftop installations) we can quickly penetrate the 70 GW diesel-based power generation, including at islands (Andaman and Nicobar, and Lakshwadeep)," says Upendra Tripathy, Secretary, Ministry of New and Renewable Energy (MNRE).
"Currently, we are installing off-grid solutions, but once distribution companies come up with a clear net-metering policy, most of these can be hooked on," says Gupta. But to his dislike, distribution companies are not very keen. The ministry has already sanctioned projects that could generate 358 MW through grid-connected rooftops, while 41 MW projects have already been commissioned.
In the past one year, 20 state regulators have asked their respective distribution companies to come up with net-metering policies, but only 13 have obliged. A net-metering mechanism allows the consumer to feed the excessive power back to the grid.
Whether it is Karnataka, which charges Rs 9.50 per unit of electricity, or Uttar Pradesh where each unit costs 50 paise, rooftop solar grids are not taking off. "We discussed this issue with Karnataka, but distribution companies seem to be reluctant and the process for clearances is tedious. This is keeping consumers away," says Tarun Arora, Joint Secretary, MNRE. "There may be certain states which may require some handholding," says another MNRE official.
The ministry has, subsequently, decided to work with Karnataka, Tamil Nadu, Andhra Pradesh and Chandigarh in the first phase. "The learning will allow other states to form the policies," adds Arora.
The CEO of a private distribution company says that they were not ready for net metering, as it may destabilise their grid. "It will be difficult for grid managers to predict how much power is available through net-metering consumers. They have to plan the power purchase from other states well in advance, the penalties for excess and under-withdrawal is huge at Power System Operation Corporation," he says, adding: "When most distribution companies are not making money, how will this succeed?"
To make its case, Goyal's ministry is pushing the railways, surface transport, and PSU oil and gas companies to opt for solar rooftops at their installations. In an internal survey of 467 government buildings, the ministry found that they can install 761 MW on rooftops. The surveyed buildings were paying tariff ranging from Rs 15 to Rs 1.34 per unit, i.e., Rs 7.24 per unit on average. "The tariff today on solar is around Rs 6.5. Therefore, huge money can be saved with rooftops. We are pushing various ministries to go for it," says a government official.
Gupta, however, said the biggest challenge will be to fund rooftops installations. If a city household wants to set up a 5 KV unit, they will have to shell out Rs 5 lakh-7 lakh. Bank loans are available for 12-14 per cent interest. "Why will he do it, unless he is passionate about green energy," quips Gupta. "We are ready to finance rooftop models, but it depends on the creditability of the building owner and not the developer," says Avijit Bhattacharya, CEO of Tata Capital Cleantech.
For commercial units only Haryana has come up with a policy mandating big units to generate at least 0.25 per cent of their energy consumption through renewable energy or buy renewable energy certificates.
Arora says talks are on with the finance ministry to rope in German fund KfW. The plan is to incubate roughly one billion euro in government agency IREDA to refinance bank loans extended for rooftop systems. "This may bring the finance cost to 8 per cent and push rooftop systems a bit more," he adds.