The rooftop solar market in India is growing at an accelerating pace owing to awareness among consumers and technological advancements in renewable energy. Solar installation companies say that a consumer’s ability to take control of the energy requirements has led to this rise in popularity.
In India, big solar companies are aiming to capture mega projects, giving an advantage to small companies to cater to the residential sector and SMEs.
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Rooftop solar companies in India are basking in the growing demand for renewable energy. According to a report by Bridge to India, the country’s residential rooftop solar market is expected to grow at a CAGR of 25% till 2030 to reach 16.2 GW. While countries like China and Spain are world leaders in solar power growth and solar power as a share of electricity, respectively, India’s efforts cannot be discredited as the country became the 2nd Asian country to record its biggest year for solar power growth in 2022.
There are various factors responsible for the growing market, such as a rise in consumer awareness, technological advancements, and proactive subsidy measures taken by the central and state governments. Moreover, prices of Chinese solar modules have dropped to a historic low of US$ 0.196 per watt peak, which is expected to provide a boost to solar power capacity additions.
Earlier this year, the Ministry of New and Renewable Energy (MNRE) announced a hike in rooftop solar subsidies for the residential segment. The ministry has also hyped Central Financial Assistance (CFA) to install Rooftop Solar (RTS) in the residential sector across the country. Similarly, initiatives like the announcement by the Telangana State Renewable Energy Development Corporation Ltd. (TSREDCO) in January to install solar panels on 500 school buildings to promote decentralized electricity generation and avoid power shedding issues in the state are helping catalyse the sector across parts of India.
India’s cumulative installed solar capacity now stands at 64.5 GW. Mercom India has reported that in Q1 2023, Rajasthan triumphed as the state with the highest number of solar installations, beating Karnataka which stood at the 2nd spot. The rooftop solar market was one of the few industries in India to remain largely unaffected by the COVID-19 pandemic.
The Ministry of New and Renewable Energy’s grid-connected rooftop solar programme seeks to reach a total installed capacity of 40,000 MW by the end of March 2026. Residential power consumers are given subsidies under this program’s component A, and discoms are given incentives under its component B.
Component B offers incentives to discoms for an initial capacity of 18 GW, while Component A gives subsidies to the residential sector for a 4 GW capacity. The availability of subsidies for the residential sector has been reorganised, with 40% CFA for capacities up to 3 kW and 20% for capacities greater than 3 kW and up to 10 kW.
The Delhi government declared that it would start investing in neighbourhood solar rooftops in January 2023. Businesses and organisations would be able to generate electricity without needing rooftop space. In addition, a joint venture between the governments of Rajasthan and the Union called for bids to commission 50 MW of grid-connected rooftop and small ground-mounted solar, which presents an opportunity for Indian businesses to set up rooftop projects.
Time for enterprise to shine
The solar market sprung into action in the last three years and over 1,000 megawatts (MW) of rooftop solar capacity has been added from October 2022 to March 2023. According to data released by MNRE in May 2023, 8,877-MW rooftop solar capacity was added as of March 31, 2023, as against 7,520 MW on September 30, 2022.
Speaking to IBT, Gagan Vermani, Founder & CEO, MYSUN, says that India’s residential rooftop solar installation market is growing rapidly and is expected to deliver multi-decade growth.
“We’ve been operating since 2018, and since last year there is a definite significant increase in the number of queries and installations… In comparison to how the demand was three years ago, I can say now there has been a 300% growth in queries,” Vermani said.
He also adds, “In my opinion, only 2% of the market, for both residential and commercial, has been captured. There is a huge market out there waiting for solar energy. However, companies need to adopt the right business models to reach those consumers. Three years ago we had to sell the concept of solar, but today we don’t have to go door-to-door to convince people.” He adds that a healthy competitive market has formed in the country as hundreds of solar installation companies are now looking into providing quality products and services to attract potential clients. On-time payments of subsidies by respective state governments have boosted confidence amongst consumers.
The affordability of solar panels and the continued rise of grid tariffs for the residential sector have been favourable for small firms. Timely reimbursements (within 65 days) along with additional subsidies have resulted in break-even for the customers to come down within 4 years.
Big solar firms in India have entered into a franchise model to expand their business operations and increase installation figures. On the other hand, small solar companies are opting to provide customised solutions, offering product quotations, zero-cost EMIs and on-site inspections for minimal costs, thereby improving their attractiveness. In Tier 1 cities, the model has worked successfully in the residential sector in terms of housing complexes and stand-alone homes.
