Giving solar power a leg-up

India’s renewables transition has so far been a success story, with the share of renewables capacity increasing sharply in recent years. Today, wind and solar account for about 20 per cent (70 GW) of the total installed capacity of about 350 GW, of which solar’s share is 27 GW (it was just 3 GW in 2014). In another remarkable inflection point, addition in renewables capacity has outstripped that of thermal generation in recent times. Of the 16 GW capacity added in 2018, solar accounted for nearly 70 per cent, with coal accounting for 28 per cent and wind 14 per cent. Clearly, with the falling costs of panels and battery storage, solar lies at the centre of the renewables turnaround. However, the creation of solar capacity has largely occurred in the utility solar space, with rooftop capacity accounting for just 5 GW. While it is a fact that utility solar is able to sell power at ₹2-2.5 a unit, against ₹4-4.5 in the case of rooftop solar, a shift in the mix towards the latter is desirable on many counts. Rooftop solar is decentralised, it empowers ordinary people and communities, and does not require land acquisition. It will provide smaller units in particular with a cheap, reliable source of electricity. Discoms and the power regulator merely need to ensure that installation standards are met.

Yet, Discoms are averse to promoting rooftop solar for at least three reasons. First, with utility solar, they are able to cross subsidise in a bigger way. Second, besides, the current net metering formula in many States does not offer any gains to Discoms. Third, rooftop solar also threatens to further destabilise their finances. To take the last point first, open access purchase and captive generation already account for a rising share of total power purchase by large-scale commercial consumers, putting the Discoms’ cross-subsidy model in jeopardy. If rooftop solar gains ground, it will lead to a further exodus of buyers. This will hurt both the availability as well as the cost of electricity for agriculture users and poor consumers. Clearly, cross-subsidisation cannot carry on. As experts have observed, Discoms need to overhaul their business model by separating their functions of wiring and providing electricity. Short-term open access, that often throws Discoms’ power purchase plans out of gear, should not be encouraged. Net metering rules for rooftop solar should be tweaked to make them attractive for Discoms as well. As with renewable purchase obligations, the Discoms should be given tangible net metering targets.

The argument that excessive solar feed-in will destabilise the grid is somewhat overblown, as the grid can be strengthened to deal with the situation. The long-term gains, environmental and economic, will offset such an investment. Germany’s renewables transition has been driven by rooftop solar. With a bit of policy incentive, grid-connected rooftop solar can become a major force in sunshine-abundant India as well.

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