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  1. Rooftop solar units stymied by policy imbroglio

Rooftop solar units stymied by policy imbroglio

Out of 400 MW of rooftop installations, the residential sector makes up only a quarter while the rest is at commercial buildings.

By: | New Delhi | Published: May 25, 2015 12:53 AM
Rooftop solar power

Nearly a year after the Narendra Modi government assumed office, the capacity of rooftop solar units stands at a dismal 1% of the target, at 400 MW. (Reuters)

The government’s ambitious plan to get 100 GW of solar power capacity created in the country by 2022 has got even tougher, with several issues constraining installation of roof-top solar units, meant to make 40% of the overall target.

Nearly a year after the Narendra Modi government assumed office, the capacity of rooftop solar units stands at a dismal 1% of the target, at 400 MW. This is even as the commitments from public sector and private entities towards grid-connected installations in solar parks have been strong and such capacity addition has made relative progress.

Including 3,500 MW capacity at solar parks, the country’s total solar power capacity now stands at close to 4,000 MW, up 50% from the level when the Modi government took over. But to reach the demanding target, the pace of capacity creation has to be much higher.

“The biggest bottleneck in creating a market for 1-100 KW solar capacity (which is mostly in the roof-top category) is lack of consumer awareness. An average urban household doesn’t quite know the implications of becoming a generator with a solar rooftop installation and how it can help cut the cost of electricity. There is no clarity on subsidy available to individual households either,” Manu Puri, principal, resource group, Accenture Services, said.

He added that an individual household that plans to install a standard 5 KW rooftop unit at a cost of nearly R5 lakh can access finance at 13% or thereabouts, which amounted to a disincentive.

Out of 400 MW of rooftop installations, the residential sector makes up only a quarter while the rest is at commercial buildings. The main reason for the household sector faring so badly is the absence of basic infrastructure of trained manpower and distribution network, according to Bridge to India, a solar power consultancy.  Financing continued to be problem too, it added.

The participants in an investment summit organised by the Centre recently for renewable power, saw commitments to build 166 GW of solar capacity, even higher than the ambitious target, from both private and public sector units.

Most of these commitments have been made towards grid-connected capacity.

“The government has a strong bias for big projects as it is a settled business with defined parameters for tendering and power purchase agreements (PPAs). But those systems are yet not in place for smaller rooftop installations despite massive potential,” Tobias Engelmeier, founder, Bridge to India, told FE.

He added that government was yet to create a market for rooftops through clear policies to bring serious players into this sector.

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Government buildings in the capital city of Delhi alone have the potential of nearly 400 MW of rooftop installation, but hardly 10% of the potential has been tapped. While some states have invited PPA bids for rooftop installations (Punjab, for instance, have sought proposals for a capacity of 53 MW), these are practically going to be grid-connected units.

“In Haryana, the government has made it mandatory for all buildings with an area of 500 sq. yards or more to install solar rooftop systems. In principle, the state’s solar policy is clear, straightforward and should be effective. However, in reality, it is lost in the woods. Currently, no relevant power consumer group, be it schools, hospitals, colleges, office spaces, malls or even private bungalows is seriously considering building a rooftop system because of the policy, because of lethargic implementation,” Bridge to India said.

As ambiguity and policy uncertainty persist on the market and financing pf small off-grid units, the developers tend to look for the safer option of bigger plants with known rules, a developer told FE on the condition of anonymity. He added that the industry is wondering whether the government intended to replace subsidy for roof-top units with interest subvention. The subsidy has anyway been halved recently to 15%.

Tata Power Delhi Distribution CEO Praveer Sinha said told FE that subsidy was indeed needed to kick-start the process and it must stay till this burgeoning sector reaches a critical mass. Recently, the company announced its plans to generate 400 MW from solar power by 2022 through rooftop solar project for its industrial and commercial consumers in the national capital.

The ministry of renewable energy has recently said that the Indian Renewable Energy Development Agency (IREDA) would raise Rs.2,000 crore via tax-free bonds to give “soft loans” to developers to implement the roof-top solar units project. “Rooftop solar and related policies are still evolving and a lot off work on the policy front is required. But the evolution seems to be slow, measured and even cautious,” another industry source said.

There are real constraints regarding buildings’ ability to withhold the load of a rooftop solar installation, according to Vineet Mittal, President of Solar Power Developers Association (SPDA). He, however, added that there was no reason to be pessimistic as despite policy uncertainty, some smaller solar players were actively involved in installing rooftop solar, which is likely to experience a spurt in growth once the battery system for storage is improved and became affordable.

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