Prime Minister Modi’s announcement of the Suryodaya Yojana for enabling one crore residential rooftop solar plants—a new market worth $32 billion—has gingered up activities in the solar sector.

businessline learns that the government has asked banks to come up with loan products to support the programme, by February 1, at relatively low interest rates, (about 8-9 per cent). Public sector companies have been informally told to gift poor households rooftop panels. According to a solar industry insider, things are moving at frenetic pace in the government, with dozens of consultations with all stakeholders. 

The Suryodaya Yojana scheme has unlocked a huge market. According to one estimate, 1 crore rooftops – big and small – could translate to about 40 GW of total installed capacity. At ₹65,000 a kilowatt, this unfolding industry could be worth ₹2.6-lakh crore ($32 billion). 

Three big steps

To make this happen, the central government has taken three significant steps. First, it has increased the subsidy for solar rooftops. For 1 kW and 2 kW, the subsidies remain at ₹14,500, but for capacities from 3 kW to 10 kW, the subsidies have been increased by 23 per cent. The revised subsidies progressively increase as ₹54,000, ₹72,000, ₹81,000, ₹99,000 and ₹1,17,000. Over and above this, a State government may give some subsidy from its pocket.

Second, to avail himself of the subsidies, the application process has been simplified. You don’t have to do a technical feasibility report—it is enough if you produce your electricity bill. After the project is complete, you should provide a project completion report, a photograph of the project and the consumer-vendor agreement, according to a Ministry of New and Renewable Energy (MNRE) office memorandum dated January 11. 

“All concerned discoms/implementing agencies are directed to ensure that no other documents are sought from the applicants,” the memorandum says. Further, the discoms have been asked to reduce the time for approval from 7–15 days now to 24 hours, in the next two years. 

Third, all discoms have been mandated progressively increasing obligations ‘distributed energy’ -- the discoms shall purchase the prescribed amount of distributed energy (which is mostly rooftop solar) every year. The obligation increases from 1.5 per cent in 2024-25 and goes all the way to 4.5 per cent in 2029-30. This is to ensure there is enough demand, in case the roof top solar plant owner wishes to export energy to the grid. 

Rooftop laggard 

The rooftop solar segment has been a laggard. Today, India has about 11 GW of rooftop solar, against the target of 40 GW which was to have been met by 2022. Even within the 11 GW, only a small sliver of that (around 2 GW) is residential—all the rest are on the roofs of factories, office spaces, shopping malls.

Prime Minister Modi’s announcement of January 22 is expected to remedy this situation, at least to some extent.

Challenges remain

Obviously, the solar industry is delighted. However, many industry leaders pointed out some challenges that need to be ironed out for the Suryodaya yojana to succeed. First, the exercise of identifying rooftop spaces and convincing the owner to put up a solar plant, or let someone put up the plant, itself is a daunting task.

It is learnt that even smaller towns are interested. Varanasi, Indore and Puducherry are learnt to have expressed interest to put up 25, 30 and 50 thousand rooftops, respectively, and have come up with additional sweeteners. But the big question is—are there enough roofs? 

Second, while there are adequate solar modules, availability of other hardware such as inverters and (particularly) net meters, is a suspect. Further, each State has a different net metering rule (for export of electricity from the rooftop plant into the grid). Unfriendly net metering rules, such as low tariff for electricity sold, might dampen enthusiasm. Finally, many industry leaders fear that the lack of standards for safety, reliability and performance will result in slipshod installations, especially given that there are thousands of companies doing installation work.

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