While residential rooftop solar power is not gaining traction, commercial and industrial solar power is exploding due to cost savings – EQ Mag Pro

Author : Mr. Rohit Khanduja, Manager, HomeScape by Amplus Solar

Shift towards solar energy, especially in a country with abundant sunshine, like India, is not only inevitable but pragmatic. Theoretically, with about 300 sunny days in a year, our country has the potential to generate an estimated five trillion kilowatt-hours of clean and renewable solar power per annum. What can set the ball rolling in realizing this potential is India’s ambitious target of achieving Net-Zero carbon emissions by 2070.

Beyond this, the volatility of fossil fuels, highlighted time and again, with changing geopolitical scenarios, is another reason to accelerate the move towards clean energy.

Having said this, what is the status of solar adoption in India?

Commercial and Industrial Sector leading the way for Solar Rooftop Installation

Regarding cumulative solar capacity installations, India stands at an estimated 50GW as of Q4 (FY 2021-22), out of which rooftop solar has contributed an estimated 7.9GW. A further bifurcation of installed solar rooftop capacity reveals that almost 75% of installations come from Commercial and Industrial (C & I) users and 25% from the residential market, thus establishing the lead by C&I in solar adoption.

Many factors contribute to this interest, but Electricity Tariff tops the charts. Generally, a C&I user is always charged higher per unit vis-a-vis a residential user by the DISCOM.

With average tariffs in the range of INR. 7.5 per unit, switching to solar energy is a lucrative option for C&I users. Moreover, the C&I consumers get returns on investment in less than five years of solar plant installation with the prevailing rates.

Further benefits are realized on account of Accelerated Depreciation that is charged on the solar assets.

Along with CAPEX based models, known for quicker ROI, innovative models like Solar Power as a Service (SPAS) have also helped promote solar adoption amongst the C&I users. SPAS works like a subscription-based model where a user pays the developer only for the units it consumes from the solar plant. Hence, there is no upfront cost of setting up the plant for the user. Here the benefit is derived as the power provided by the developer is cheaper than the DISCOM. Usually, the power rates are lower by 30-50% per-unit basis.

Most C&I units are housed in larger complexes with extensive roofs- perfect for maximum utilization of solar potential at the premises. In addition, more extensive solar systems always translate into better economies of scale, which further aids cost reduction.

With the government now strongly pushing the private enterprises to aim for carbon neutrality, it has become imperative for the segment to choose solar energy for their power needs.

Case for Residential Solar Rooftop Sector

So far Residential solar sector has seen limited growth avenues vis-a-vis its commercial counterpart. Cumulative installed capacity stands at an estimated 1.9GW as of Q4 of FY 2021-22.

Various factors are limiting the progress of the residential solar market till now.

As mentioned, electricity tariffs have always been low for residential consumers (average rate of INR. 5.5 per unit) compared to C&I users, thus deterring the urgency towards a solar energy shift. This, combined with the fact that power consumption drops by 40% month-over-month in regions with extreme weather conditions, further dissuades residential consumers from adopting solar.

Another major factor that acts as a deterrent in solar adoption at residences is space availability. Interestingly, apart from the size of the roof, the ongoing Covid scenario has turned rooftops into an area for homeowners to safely interact with the outer world, leading to consumers desisting on letting go of their roof space to accommodate solar systems.

Lack of easy financing options is another primary subject that has slowed solar adoption in the residential space.

However, despite all the challenges presented by the current scenario, the picture of the residential solar market still looks very bright. With an estimated 78 million urban houses, a vastly untapped market is ready to be materialized. Furthermore, the recent MNRE guidelines have allowed the consumer to select any vendor of their choice and still be eligible for subsidy. This is expected to usher in an open residential market, bringing a lot of competition. As a result, the prices of residential solar systems are expected to plummet, bringing better Returns on Investments to the residential consumers.

Additionally, an ever-stronger push towards the electrification of vehicles by the government will shoot up residential electricity consumption. An average of 45-55 units is required to charge an electric car battery pack fully. Such high and consistent consumption will draw more residents to opt for self-sustaining solar energy at their premises.

The recent availability of aesthetically pleasing WPC Pergola structure-based solar solutions with elevation further helps ease the space crunch on the roof. Placed at the height of 8 feet and above, it gives the benefit of solar solutions without taking up much roof space.

With residential solar rooftop contributing a 54% share in Q3 of FY 2021-22, the green shoots of the changing trends are already visible. Therefore, an optimistic picture can be projected for the future where residential and commercial solar rooftops will equally contribute towards achieving the sustainable energy targets of the nation.