India’s rooftop solar energy sector is poised for a major transformation, driven by supportive government policies, evolving consumer attitudes, and lucrative economic value proposition when adopting Solar. The installed rooftop solar capacity in India is only about ~12 GW out of the total capacity of ~87 GW, a mere 13.7%, while globally it is about 40%. This will now rapidly change, and the rooftop contribution will steeply climb in the coming years. We believe this will cross 100 GW by 2030!
As of 2024, India holds the third position worldwide in terms of total installed solar capacity, a testament to its swift advancement and dedication to enhancing its solar infrastructure. India has indicated a target of a fossil-free energy capacity of 500 GW by 2030, which will have a significant contribution from Solar. The utility-scale solar, which is currently at about 75 GW will be difficult to scale as rapidly as we have seen historically since the availability of transmission capacity to move the solar energy from large remote locations where solar farms are built to load centres which are typically urban areas has become a serious bottleneck in the country. Rooftop solar, which obviates the need for such transmission capacity can rise up to the challenge and fill in the gap. The policies in the country are finally geared to make a major push to rooftop solar, as witnessed from the PM Surya Ghar Yojana and its massive outlay of 75,000 Crores.
The PM Suryodaya Yojana is a significant initiative by the Indian government aimed at boosting the adoption of solar energy by residential consumers. Under this scheme, the government offers substantial subsidies to reduce the financial burden on consumers installing rooftop solar panels. For a 3 kW system, the government gives about INR 78,000 in subsidy, which is about 50% of the capital costs, thus making it an extremely lucrative investment. These subsidies are intended to lower the upfront costs of solar panel installations, making solar energy more accessible to a broader audience. Various governments have been making the electricity prices nearly zero for the first 100-200 units, which has resulted in overall price of electricity growing for larger consumers, making solar rooftop further attractive. The public sector banks have all started offering financing for rooftop solar, making capital available for the purchase of systems. The government has also for the first time in its history allocated a budget of nearly $80M only for advertisement to grow the awareness for solar rooftop.
Government has essentially opened up the floodgates of the market for rapid adoption of solar rooftop. The biggest risks to the program are how the state Discom’s (State owned distribution companies) cope with the cannibalization of their revenue, and the overall quality of the systems delivered by service providers. Quality has several dimensions – quality of materials used, quality of the design principles, quality of construction practices, reliability or longevity of the materials used, and finally the energy performance. 99+% of the providers will only pay a lip service to quality and so far the government has been slow to act on this front given the enthusiasm to scale the program. If proper measures are not taken by the government, the public may feel cheated and lose their investment, which can negatively impact the whole sector. Solar Rooftop can earn a reputation that it doesn’t work while the technology is perfectly capable to deliver the expected energy over 30-35 years if delivered with the right intentions.
Consumer attitudes toward rooftop solar installations have undergone a significant transformation in recent years. This shift is largely attributed to a heightened awareness of both the environmental and financial advantages of solar energy. As more people recognize the long-term savings and reduced carbon footprint associated with solar power, the appeal of rooftop solar systems has grown. Additionally, the declining costs of solar technology and the availability of more accessible financing options have made solar installations increasingly feasible for a broader range of households. The rooftop solar sector in India is on the brink of a massive transformation and we expect close to 100 GW of Solar Rooftop capacity will come up in India by 2030, much higher than the estimates planned by the government because of the sheer momentum created in the society for the benefits of Solar.
In conclusion, India’s rooftop solar energy sector is poised for significant growth. The combination of favorable government schemes such as the PM Suryodaya Yojana and PM Surya Ghar Muft Bijli Yojana, shifting consumer attitudes, and strong value proposition creates a strong foundation for continued expansion. As rooftop solar installations become more widespread, they will play a central role in meeting India’s energy needs and advancing towards a sustainable energy future.
Pashu Gopalan, Chairman & CEO of Fenice Energy.