Rooftop Solar: India’s steep climb to the 40 GW target – Sunil Dayal, Business Head, Benara Solar

The Solar Photovoltaic Rooftop projects need to be converted into consumer products such that they are marketed easily and enable channelling of global investments, writes Sunil Dayal, Business Head of Benara Solar

Solar photovoltaic rooftop (SPR) has globally emerged as a strong decentralised system to address climate change issues by reducing reliance on conventional fossil fuel based energy available from grid. In this regard, India set a target in 2015 to install 40GW of grid-connected solar PV rooftop projects by 2022.

India today stands at a transitive stage from fossil fuel based to renewable energy based model of energy generation. The country has by now installed about 2.6 GW of SPR plants of which 1GW has been commissioned in the last one year itself. To speed up this transition there is a strong need for a decentralised and market based approach towards SPR.

India’s current thrust on RE development is mainly policy & subsidy driven and therefore its less market oriented. Lets take an example. For the social and domestic sector today viz. schools, colleges, homes, institutions of social importance etc, the motivation to install a SPR system is the 30% subsidy benefit. A huge dependency of the market on government subsidy has jeopardised the growth of the SPR projects in India as the process is long winded and involves many permissions. In contrast a market driven approach towards SPR is required to escalate an exponential growth which will help India achieve its balance target of 94% by 2022 or atleast will come close to it.

When the market will itself become drivers of growth, both capex and opex based systems shall get promoted. Despite solar energy being more affordable than , hydro, thermal and nuclear only about 10% of the country’s total solar energy installation is residential rooftop solar.

There have been concerted efforts from institutions like World Bank, ADB, IREDA, SBI, PNB etc, however despite this the facilitation of loans have not been able to get passed on to the EPC(Engineering, Procurement & Construction player. Most SPR projects are developed in India by EPC players rather than the developers or investors themselves. EPCs are unable to get the benefit of these are loans or working capital as these are primarily meant for the developer, investor or owner of the SPV rooftop systems.

For instance, The World Bank has initiated a 1B$ distributed solar program for India called the Grid-connected Solar Photovoltaic(GRPV) Program, financed by SBI. The EPCs in India couldn’t benefit from such a program. Thus a facilitation of working capital to the EPC player will go a long way in ensuring India’s timely climb to the steep 40GW target.

Specialised consumer financing for SPR systems are needed to create markets. These companies may require initial equity investment, as well as access to cheap, long term debt capital to operate effectively. Such retail loans can be bundled and resold to global financial institutions and investors interested in renewable energy.

The government should encourage multilateral banks and global private capital to invest in such consumer finance companies. Thus as a result, instead of looking for bankable renewable energy SPR projects around the world to fund, global investors will find it easy to fund specialised consumer financing intermediaries with experience in retail banking which follow global accountability standards and are monitored by national regulators.

Standardisation of document for RESCO(Renewable Energy Services Company) and CAPEX(Capital Expenditure) modes of rooftop PV projects is one pertinent area where the government should take feedback from different stake holders viz. investors, bankers, project developers and EPC players such that the hindrance to financial closure can be eliminated.

All discoms handling solar connections should be monitored by an all India body like SECI(Solar Energy Corporation of India). The way discoms have been monitored by SECI in DDUGY(Deen Dayal Upadhayay Grameen Yojana) scheme has been a grand success. Such success model should be replicated to the grid-connected rooftop scheme.

(Power Purchase Agreement)PPA signing should be made a tri-partitive agreement involving the investor, the customer and the concerned discom. In order to bring uniformity in the system a new model of metering should be evolved by eliminating the short-comings of gross-metering and net-metering. Further all, discoms should be given incentive on achievement of connectivity for each of their solar projects to compensate them for facilitating installation as well as for loss of business.

The growth impetus needs to come from the social and residential institutions themselves. The need of the hour is perhaps some sort of an obligation on the social and residential sector such that the sector itself becomes a driver of growth rather than being dependant on policy and subsidy. Even the European Commission has pushed for innovative market based implementation mechanisms to support the SPR policy. New business models should be devised such that they aid in the ease of doing business and thereby help India achieve a substantial percentage of its 40GW target if not 100% target.

DISCLAIMER: The views expressed are solely of the author and our media does not necessarily subscribe to it. We shall not be responsible for any damage caused to any person/organisation directly or indirectly.

By – Sunil Dayal, Business Head, Benara Solar,

Sunil Dayal heads the Strategy and Business function at Benara Solar. He is a renewable energy expert and has advised clients on various areas in the sector. Dayal is an alumnus of Indian Institute of Technology, Delhi and has previously worked for Orange Renewables and Azure Power.