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The commercial and industrial segment accounts for three-fourths of the country’s rooftop solar installations, driving India’s renewable energy push
By: Manish Pant
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Maruti Suzuki
unveiled Asia’s largest 20-megawatt peak (MWp) carport-type solar power plant at its Manesar facility near Delhi in June. With this, India’s largest carmaker joined the front ranks of commercial and industrial (C&I) trailblazers that are increasingly harnessing solar power to meet their energy requirements. 

With solar panels mounted on the overhead shade of a parking shelter the size of nearly 23 football fields, the facility will contribute 28,000-megawatt hours (MWh) per annum to the company’s energy requirements. This is equivalent to the energy required by Maruti to produce 67,000 cars. “Our company has been committed to the cause of expanding the use of sustainable energy options to optimise operations. The power generation from this initiative will constitute over 11.5 per cent of the power requirement of the facility at Manesar,” says an excited Hisashi Takeuchi, Managing Director & CEO of Maruti Suzuki.

SHINING BRIGHT: India in FY22 added 1.7 GW of rooftop solar capacity, the highest ever in a fiscal year.

Rooftop solar installations, like the one at Manesar, are very popular in India. In FY22, the country added 1.7 gigawatt (GW) of rooftop solar capacity, the highest ever in a fiscal. Such installations were up 136 per cent compared to 719 MW in FY20, according to a report by consultancy firm Mercom Communications. An increased focus on sustainability is prompting companies like Maruti Suzuki to either incrementally expand renewable energy utilisation or go green by switching over to 100 per cent renewable energy. In the first quarter of FY23, 456 MW of rooftop solar capacity was added, the second-highest for a quarter. If the trend continues, India’s solar capacity addition in FY23 will surpass the FY22 number towards the end of the fiscal.

What is driving this growth? According to Gyanesh Chaudhary, Vice Chairman and Managing Director of Vikram Solar, India’s largest solar module manufacturer,  100 per cent FDI single-window clearance, an open-access order, focus on energy storage, fiscal benefits, tariffs and duties on imports, an extension of the Approved List of Models and Manufacturers (ALMM) deadline, in addition to government policies and subsidy schemes such as SRISTI and PM-KUSUM—to popularise rooftop solar installations in the residential market segment—  “are serving to provide the rooftop solar industry with a favourable regulatory landscape”.

Why solar energy? Animesh Damani, Managing Partner at renewable energy developer Artha Energy Resources, explains: “Firstly, in a lot of industries where electricity cost is a major input, rooftop solar is beneficial because in a model based on operational expenditure you end up saving 20-30 per cent on unit rate. And in terms of capex, you are sitting on up to four months of solar, so that’s the biggest driver.” Secondly, he adds, environmental, social and governance (ESG) has become a prominent driver these days. “A lot of multinationals that have adopted rooftop solar are also demanding that their suppliers do the same.”

Issues such as financing, regulatory uncertainty and policy divergence across states need urgent attention, and must be tackled to further speed up solar adoption.

Gyanesh Chaudhary
Vice Chairman and Managing Director
Vikram Solar

Gyanesh Chaudhary
Vice Chairman & Managing Director
Vikram Solar

No surprise there. Nashik-based vineyard Soma Vine Village, one of Artha’s clients, invested in a rooftop solar plant as part of its sustainability goals. “Being the first boutique winery in India to take a step towards sustainable energy, we set up the solar rooftop panels in a way that reduced the structure temperature by two degrees and significantly reduced electricity bills. Looking at the current benefits, we have made arrangements to add another 200 kW to our existing capacity,” says Pradeep Pachpatil, Winemaker and Chairman & Managing Director. 

The C&I segment accounts for nearly 75 per cent of rooftop solar installations in India. “Saving on electricity costs is assured for C&I consumers who typically pay a higher tariff to the distribution companies. This, along with other factors, has led several C&I consumers to instal rooftop solar where, with some investment and use of unused or waste space in their premises, they are saving on electricity costs,” says Shashwat Kumar, Partner at law firm Shardul Amarchand Mangaldas & Co.

“Rooftop solar provides one of the cheapest and the most easily adaptable clean energy options. The availability of various capex and opex models coupled with the potential savings in energy charges and rising consumer awareness have contributed to the growth in the C&I segment,” says Tushar Sud, Partner at Deloitte India.

Not just the C&I segment, the residential solar power segment, which contributes the rest 25 per cent to India’s solar capacity, is also gaining traction. “There is a very clear demarcation of opex and capex segments in each category. Rooftop solar has now become a ‘pull’ product, especially with customers today demanding advanced technology. Many companies have started exploring the round-the-clock supply of green power by coupling rooftop solar with storage to meet their sustainability needs,” says Sumit Pandey, CEO of independent power producer Hinduja Renewables.

With increased investor interest in rooftop solar, advanced technologies like the adoption of larger-sized wafer-based modules, use of bifacial modules and installation of solar along with battery storage facilities are being explored in the Indian market. “This is helping the entities save significantly on electricity costs, reducing the technology as well as installation costs and increasing energy generation,” says Shardul Amarchand’s Kumar.

Largest single-shed rooftop solar plant in Eastern India, installed by Vikram Solar.

There are many new and dynamic entrants as developers are offering end-to-end solar project development, financing, engineering, procurement and construction (EPC) and operations and maintenance (O&M) services for homes, SMEs and C&I consumers.

Not everything is hunky-dory. The Covid-19 pandemic disrupted supply chains globally, slowing rooftop solar capacity addition in India. The core businesses of C&I entities were also impacted adversely, causing cash constraints and limited financing options for new projects.

Resistance from distribution companies is another hurdle. “State power utilities often view rooftop as competition instead of [being a] partner. While some states do not permit the opex model, other states force gross metering on customers with Behind-the-Meter (BTM) plants if they opt for open access. Some states limit net metering to 500-1,000 kW,” says Pandey of Hinduja Renewables. BTM implies the onsite production and consumption of power such as in the case of rooftop solar installations.

In a lot of industries where electricity cost is a major input, rooftop solar is beneficial because on an opex model you end up saving 20-30 per cent on unit rate.

Animesh Damani
Managing Partner
Artha Energy Resources

Animesh Damani
Managing Partner
Artha Energy Resources

Net metering is especially critical to wider adoption of rooftop solar as the installation may often generate more electricity than is consumed during daylight hours. Net metering enables the user to be only billed for the actual power consumed. The excess energy generated is put back into the electricity grid for use by other consumers. Many countries incentivise consumers who put back power into the grid. 

Other key barriers include the non-availability of large installers or system integrators and lack of easy financing options. However, in the past few years, financial institutions have become relatively amenable to financing renewable energy projects. “Consistency in state-level policies combined with the availability of financing options could further benefit the rooftop solar adoption by C&I,” says Deloitte’s Sud.

Developers like Artha’s Damani are also unsparing in their criticism of the frequent policy-level changes witnessed in the renewable energy space. “When you had nine policy shifts in a seven-year window, for 15 months stakeholders were left learning to adjust to them!” 

And for the residential segment, Pandey says, “While rooftop solar is permeating the country, continued support from power distribution companies is critical for its success.” 

Despite all the impediments, the future looks promising for the solar sector. According to Shardul Amarchand’s Kumar, the Covid-19-induced slowdown was a temporary setback. “The growth was marginally affected, and has now gathered more momentum than the pre-Covid-19 period,” he says.  

The recently released Draft Electricity Amendment Act, 2020, proposes several progressive measures, including the introduction of a pan-India Renewable Purchase Obligation (RPO) with a strict penalty mechanism. Distribution companies and other large customers of electricity are obligated to buy a specific percentage of their power from solar energy sources under an RPO. 

“If there are no more disruptions on the policy or supply chain fronts, the rooftop solar market should start witnessing the addition of 5-6 GW capacity annually, with 2 GW coming from C&I alone by 2024. You will also see the residential [segment] revive with a bang once there is enough electric vehicle penetration,” says Damani. Welcoming the new initiatives, Vikram Solar’s Chaudhary says issues such as financing, regulatory uncertainty and policy divergence across states need urgent attention to further speed up solar adoption in this segment. 

Only then will the sun truly shine brightly on the solar modules on India’s rooftops.


Story: Manish Pant
Producers: Arnav Das Sharma
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