Rooftop solar programme making poor progress as it is not cost-effective

The government is unlikely to meet its much publicised target of 175 GW (gigawatt = 1,000 megawatt) of renewable energy by 2022 due to the poor progress of the rooftop solar programme, according to officials in the Ministry of New and Renewable Energy. The Ministry was considering increasing the contribution of other sources such as biogas and small hydro to make up the difference, they said.

Several issues

“You see, there are several issues with rooftop solar,” an official told The Hindu on the condition of anonymity.

“The policy issue is that the tariff structure right now is such that it is just not remunerative for people to set up rooftop solar. The cost of doing so higher than the money they stand to make. The other issue is the use that people put their roofs to. Most roofs in India are flat, and people find several alternative uses for these such as drying clothes, and even hosting parties or meals. There are parts of India where people even sleep on their roofs. So they don’t want to cover that whole space with solar panels,” the official said.

New plan

The government was aware of these issues and was considering a new plan to incentivise rooftop solar, he said. “There are talks in the Ministry about what to do about this. But at the moment, it looks unlikely that the government will meet the 175 GW target because of this segment, solar rooftops. Every other segment is moving on track.”

The government had a announced a target of 40 GW of rooftop solar by 2022, but had achieved only about 1.3 GW as of December 2016, which is a little more than 3% of the target.

“On current trends, it does look like the rooftop solar target will be missed,” Arunabha Ghosh, CEO of the Council on Energy, Environment & Water told The Hindu. “The challenges for rooftop solar are different. The first is that we don’t have financial institutions aggregating demand across a fundamentally disparate set of projects. Unless this is done, it will be difficult to attract the kind of investment needed.”

The second issue, Mr Ghosh said, was the de-risking of investment in the rooftop space. While this has been done for commercial solar projects, it has not been done for rooftop solar. The third problem is that there is no regulatory clarity on guaranteed payment by utilities on the net metering basis.

“If these are addressed, then the investment in this area can significantly pick up,” Mr Ghosh said.

“Implementation of rooftop solar is taking place at a much slower pace and it seems unlikely that the government would achieve its 40GW target by 2022,” a recent report by the PHD Chamber of Commerce and Care Ratings said. “Specific policy initiatives to support rooftop solar especially effective net-metering implementation and offering incentives in order to attract financial investors needs to be introduced.”

Another official said, “The Ministry is considering increasing the contributions of biogas and small hyrdro to make up the difference. These are doing very well and there is capacity to increase their contribution.”

The government’s current plan is to get 10 GW from biomass powered plants and 5 GW from small hydro (hydro projects below 25 MW in scale). According to a May 2016 report by the Standing Committee set up by the Ministry, the country has a potential of 19.7 GW of energy capacity from small hydro. It has so far utilised only about 21% of this.

Energy experts, however, have been saying that this potential is largely notional since the locations of these projects are in increasingly difficult terrain, increasing the cost of the projects, and hence the tariffs at which they will be able to deliver energy.