Indian households just aren’t interested in rooftop solar panels

Rare-ing to go.
Rare-ing to go.
Image: REUTERS/Adnan Abidi
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The scorching sun over Indian homes isn’t doing much for the country’s renewable energy targets.

While commercial and industrial buildings are increasingly adopting solar panels, households account for only 9% of the total rooftop solar capacity, according to Bridge to India, a renewable energy consultancy firm.

Overall, India’s rooftop solar capacity rose to about 3.4 gigawatts (GW) in September, at a year-on-year growth rate of 75%, but most of it came from commercial and industrial buildings.

“Growth in the residential market lags due to a combination of reasons: high upfront cost, lack of financing options from banks, and most importantly, lack of standard products and customer awareness,” Bridge to India said in a statement.

Prime minister Narendra Modi’s government aims to increase India’s total grid-connected rooftop solar capacity to 40 GW by 2022. But at the current rate, only 38% of the target will be achieved, Bridge to India said.

All about that money

In several Indian states, power from solar panels is cheaper than from traditional grid sources. But households lack easy access to capital for the purchase of equipment.  

Banks often ask for home-ownership documents as collateral for loans, said Bharath Jairaj, director of the energy program at World Resources Institute India, a non-profit research organisation that recently surveyed 2,000 urban Indian households on their use of solar panels. 

The government subsidises upto 30% of the equipment cost for households, but “the subsidy mechanism is not transparent, plus the application and disbursal process is complex,” Bridge to India said.

Most industrial and commercial users avail the services of operational expenditure (OPEX) companies, which incur the cost of setting up and maintaining the equipment and sell the power generated from it to building owners. OPEX firms are, however, not as keen on residential users given their low requirement levels and the small sizes of household rooftops.

Owners of the rooftop systems can also earn by supplying excess power to state-owned power distribution firms (discoms). The concept, known as “net metering,” is important for residential consumers as their panels create surplus power during the day when the households themselves are drawing less power. But many of the discoms are financially stressed, and resist net metering as it is an additional drain on their revenue.

Households also have less incentive to switch to solar panels, since a residential building’s power consumption is charged at a lower rate than that of commercial and industrial buildings. “High power tariffs are the key reason for commercial and industrial buildings to switch to rooftop solar,” Bridge to India said.