Bottlenecks for Rooftop Solar
Mr. AnimeshDamani,Managing Partner, Artha Energy Resources
Considering all the benefits, the growth aspect and the advancements in generating electricity from rooftop solar, it now makes a wise business proposition to be a part of the industry. However, like every other industry there are also a lot of challenges that are faced by the participants in the rooftop solar space. There are many bottle necks in rooftop solar installations, despite the government subsidy of 30%.
Globally, one of the fastest growing and talked about energy generation technologies is solar energy. The driving factors of the large scale development and deployment of solar energy are decline in the cost of production, climate change and the emergence of relevant government policies and regulations. The government of India has set a target of achieving 1,00,000 MW of solar power; of which 40,000 is from rooftop solar by 2022.
The solar rooftop energy generation capacity has crossed 1GW as on October, 2016 and further 513MW was added by October, 2017 (span of 12 months). It is expected that the solar market will grow by 90% in 2017with a pipeline of around 14 GW of utility scale projects. The above capacity addition and generation will help India to be in the third place after China and USA. (*statistics from MNRE)
To be ahead in the league the Ministry of New and Renewable Energy (MNRE) has recently made provisions to provide financial incentives to DISCOMS to install rooftop solar plants. The provision will provide financial support up to INR 3.75m (USD 55,000)/MW for up to 1,350 MW of rooftop solar capacity. The allocations can be utilised by the DISCOMS for the enhancement of their network, creation and development of awareness, developing enabling forms/ processes, meter/ equipment procurement and capacity development.
In 2015, the Cabinet Committee on Economic Affairs, chaired by Prime Minister NarendraModi approved a budget amounting Rs. 5,000 crores which was earlier 600 crore, for the implementation of Grid Connected Rooftops systems over a period of five years upto 2019-20 under National Solar Mission (NSM). This will support the installation of 4200 MW Solar Rooftop systems in the country during the next five years. (*MNRE)
To make the rooftop solar industry more lucrative for potential participants, Government of India has provided a subsidy of 30% to general category States/UTs and 70% to special category States i.e., North-Eastern States including Sikkim, Uttarakhand, Himachal Pradesh, Jammu & Kashmir, Lakshadweep and Andaman & Nicobar Islands. However, there are no such subsidised provisionsfor commercial and industrial establishments in the private sector since they are eligible for other benefits.
Considering all the above benefits, the growth aspect and the advancements in generating electricity from rooftop solar, it now makes a wise business proposition to be a part of this industry. However, like every other industry there are also alot of challenges that are faced by the participants in the rooftop solar space. There are many bottle necks in rooftop solar installations, despite the government subsidy of 30%. These bottle necks include various aspects such as red tape, bureaucracy, challenges in on ground implementation, ease of business, high capital cost, expensive storage solutions to name a few that affect the growth of the sector.
Solar Rooftop Challenges
To elaborate the bottleneck let’s talk about Net-metering being one of them. Government has put a cap of 1MW per site of rooftop solar, this has hampered the efficient growth of the sector. Such an arbitrary constraint on the installation of rooftop facilities disincentives large consumers of electricity as the cost-savings for a 30-50MW consumer turns out to be miniscule and not worth their time and effort.
Further, lack of communication and delayed approvals on net metering have negatively affected industry participation. It has also become very important to create awareness amongst individuals to solve their doubts regarding various concerns surrounding structural stability, roof leakage, or other technical factors which are usually nothing more than myths.
Potential power generating players are backing off due to delayed payments of subsidies; since they are then made to bear an additional capital cost, increasing their overall cost.
The benefits provided by the government are restricted to individuals and institutions registered under the society’s act and NGOswhile the commercial and industrial units are neglected. As per the government data shown above, the bulk of the capacity addition in solar is from the government followed by the commercial and industrial sector. However, apart from accelerated depreciation, this segment has been deprived of any other policy benefits.
It has often been a misconception that all industries would have the capital to invest in solar projects. Given the weak industrial demand of the last few years, many have been weakened financially.
Moreover, most industries have roofs that are unable to sustain the load of a solar system. On average, solar panels and mounting equipment weighs 60-80 kgs per KW. Most industrial roofs in India are of asbestos or some other weak material that is unable to support the load of a large installation. This pushes up the project cost even because of the additional expense in getting the roof ready to support a solar plant.
Therefore, if the benefits are extended toward commercial and industrial units, the generation in rooftop solar will increase the uptake of rooftop solar capacity and hence will help the Government in achieving its overall target of 100 GW solar installations by 2022. But if it is not feasible for the government to provide subsidies to the industrial units, they may provide incentives in the form of lower power rates. Further, DISCOMS should actively consider for industries to install solar roof top plants. There is business case for such a move as it helps reduce aggregate technical and commercial losses through decentralization of power. This proves that the industry is in dire need of a concentrated and coordinated policy action to support the four-fold growth required from the renewable energy sector.
Availability of solar power is not 24X7, this implies that the generated energy need to be stored. Such storage is only possible when producers install requisite batteries that can store and supply the power even in the absence of the sun. Batteries are a useful part of the distribution network that helps in balancing the grid. However, the cost of acquiring and maintaining these batteries is not very reasonable. Therefore, solar plants with battery storage must be allowed an additional subsidy due to high battery expense. Further, the current battery storage cost is almost double the total project costs. Once the storage cost comes down there will be as enthusiastic uptake of rooftop solar according to the needs.
To overcome the above-mentioned bottlenecks, it is imperative that the government implements a complete digital interface with time restrictions for officials to sanction approvals. This will fast track the approvals and execution of projects reducing processes and allowing reduction in the lag time. Moreover, there must be more policy action on incentivising the commercial and industrial sector. Apart from the government, this is the only segment from the private sector with the potential to add large amounts of capacity.
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