The proliferation of rooftop solar has been non-uniform across different states in India. EY has therefore conducted an in-depth analysis of the market to facilitate investors in making informed investment decisions.
Our latest report on “State Rooftop Solar Attractiveness (SARAL) Index” ranks 31 states and Union Territories of India based on robustness of policy framework, effectiveness of policy support and its implementation, investment climate, consumer experience and business ecosystem.
The Indian rooftop solar revolution is gaining momentum with substantial interest from first-time entrepreneurs, bigger infrastructure players, large corporates, developers, financial institutions, development banks, end users and Government entities. At the same time, various states have different rooftop solar policies, incentives, metering regulations, solar potential, availability of rooftop area, etc. This warrants requisite for a uniform platform to account for these parameters and rank states based on their rooftop solar attractiveness.
SARAL index is an imperative tool to channelize investments while creating a conducive and positively competitive environment for rooftop solar.
SARAL index gives an insight into a state’s business ecosystem and investment climate in detail. The index measures finance and technology-specific parameters, such as ease of application, ease of availing state subsidies, payment settlement time and restrospective changes to the policy that impacts investments and investor confidence.
The index and the accompaning report is a repository of data as it covers the existing market conditions regarding number of developers, the industry workforce and the share of C&I consumers in total rooftop solar installations.
In addition, SARAL index can help both the Government and investors in identifying credit needs of the states based onthe ease of financing or securing loans for projects.
The SARAL framework consists of five parameters, with 16 sub-parameters and overall 34 scoring indicators making it a comprehensive report on the Indian rooftop solar market.
Weightages for the five parameters are as follows:
Robustness of policy framework determines the state regulations regarding the route followed by a prospective prosumer in setting up a rooftop solar system and the financial incentives and support available to them for this.
Robustness of policy framework determines the state regulations regarding the route followed by a prospective prosumer in setting up a rooftop solar system and the financial incentives and support available to them for this.
Effectiveness of policy support/implementation driver highlights how the policy framework enables the uptake of rooftop solar systems, making them more accessible to the prosumer and how dynamic this system is with regard to development.
Investment climate includes all the factors pertaining to the monetary competitiveness of the rooftop solar segment in the state and the availability of resources to back rooftop solar systems.
Consumer experience is an important factor in evaluating the offtake potential of any technology or scheme. The more aware and accepting a consumer is, the more likely it is that he/she is going to adopt that technology, in this case, the rooftop solar systems.
Business ecosystem signposts the performance of an economy, its behavior and prospects. The business ecosystem encompasses the economic and political environment in the states and thus helps ascertain the attractiveness of the state for long-term investments. The parameters within the space of business ecosystem conjunctively determine the economic and political stability as well as the presence and potency of the business enablers in the states.
SARAL Ranking
We assigned six grades to the states based on their total scores. These grades were derived by using a combination of qualitative and quantitative methods. The top performing state was assigned A++ and rest of the states were assigned remaining five grades.
Our analysis shows that the Distribution Companies (DISCOMs) are at the centre point of all the changes that the states need to make to achieve their solar rooftop targets. A strong push to implement regulations, comprehensive capacity building programs and conducive environment for DISCOMs to help them alleviate financial stress is needed across the states.
At EY, under our constant endeavour to provide insights and quality services to help our clients unlock their true potential, we have created State Action Plans (SAPs) – comprehensive reports for each state with actionable insights that can help the, realise their rooftop solar potential.
Summary
SARAL Index acts as a measuring scale in the country that can rank the states according to their growth, level of maturity, investments and policy framework in the solar rooftop sector. The development of SARAL Index, will empower investors with a ready reckoner to make informed investment decisions.
Source: ey
