Even though a solar power generation promotion program has existed since 2010 in the form of the Jawaharlal Nehru National Solar Mission, it found new meaning in the last few years. The government introduced strong subsidies and incentives for solar power projects.
Equally important was a well-timed drop in the cost of solar panels and other components for creating solar power, which saw the tariff reduce from about Rs 7.8/kWh to Rs 2.44/kWh. Coupled with strong fiscal incentives provided at the utility scale, these lowered costs have helped India reach a figure close to 20GW of installed solar power.
However, adoption in the rooftop segment has been relatively tepid for a variety of reasons – a resurgence in solar panel prices, GST-related confusion, lack of regulatory clarity, limited access to credit, and lack of awareness amongst the public.
Legacy systems and bureaucratic red tape have hobbled the process of receiving approvals for solar power projects. Authorities like the CEIG to Government and DISCOMs are often slow to respond. This must, in part, be due to skewed incentives – the more urban residents take to rooftop solar power plants, the less revenue the DISCOMS will make. For now, there is no incentive to the DISCOM, to allow this transition.
Additionally, a 1 MW cap on net-metering being implemented by State nodal agencies (like UPNEDA and HAREDA for UP and Haryana respectively) is curtailing growth in the high-demand RESCO revenue model for Independent Power Producers. Further, renewable energy developers face 5-28 percent GST on input equipment, but with no GST on power sales, they can’t avail any offset.
When Greenpeace conducted a survey, nearly 55 percent of respondents indicated an interest in using the technology. However, the report also cited that many people perceive it to be an enterprise that requires large upfront capital investment, leaving this source of energy accessible only to the rich.
Bridging the information asymmetry will be a key factor in whether or not the sector reaches its 2022 targets.
The private sector is attempting to bridge these gaps through tools that scientifically estimate the gains of switching to solar power for users, and provide multiple financing options to reduce the initial capital outlay. The regulatory framework also needs a swift overhaul to incentivise DISCOMs to act promptly, clear up GST confusion and streamline subsidy delivery to customers and credit delivery to private solar power developers.