HomeRenewable energy ›India’s Rooftop Solar Sector Grows Under PMSGY Amid Challenges- IEEFA

India’s Rooftop Solar Sector Grows Under PMSGY Amid Challenges- IEEFA

India’s rooftop solar sector is expanding through the Pradhan Mantri Surya Ghar Yojana (PMSGY). However, persistent challenges like domestic panel shortages, technical glitches, and regulatory complexities continue to slow the sector's broader adoption and growth potential.

October 16, 2024. By EI News Network

India’s rooftop solar sector has seen significant growth in recent months, largely propelled by the government's efforts through the Pradhan Mantri Surya Ghar Yojana (PMSGY), which was launched in February 2024.

This was revealed in the latest report titled 'Unleashing the Residential Rooftop Solar Potential' by Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics.

The report said that as part of India's larger push toward renewable energy, the PMSGY scheme has focused on increasing solar adoption in the residential sector, positioning rooftops as key players in the green energy transition.

"Since the launch of PMSGY, the residential rooftop solar market has expanded rapidly. Within just six months, the scheme has witnessed a surge in applications, with 1.3 crore (13 million) registrations on the National Portal for Rooftop Solar (NPRS). This has resulted in the installation of 3.85 lakh (385,000) solar rooftop systems, adding 1.8 GW of new capacity. The government has set an ambitious target of installing 30 GW of rooftop solar across 1 crore households by March 2027," said the report.

Gujarat, a leading State in rooftop solar adoption, accounts for nearly 75 percent of the country’s residential solar capacity. The scheme’s success in Gujarat is now serving as a model for expansion into tier-2 and tier-3 cities and rural areas, where demand for solar energy is expected to increase in the coming years.

However, the rooftop solar sector continues to face significant challenges despite these positive developments. Dwelling on the challenges, the report said  that one of the major concerns is the limited availability of domestically produced solar panels that comply with the Domestic Content Requirement (DCR). "This supply shortage has led to higher prices and limited access to solar modules, especially in the residential market where the cost of installation is already a concern for many households. As demand for rooftop solar systems continues to grow, the lack of affordable, domestically manufactured panels could potentially slow down the sector’s progress," pointed out the report. 

In addition to supply-side issues, technical challenges have also emerged as roadblocks. "Many consumers have reported facing problems with the NPRS, which is designed to streamline the application and approval process for rooftop solar projects. Glitches in the portal, coupled with weak transmission infrastructure, have negatively impacted consumer confidence,"  the report said.

In some regions, such as Assam, there is a shortage of vendors to install the approved projects, further delaying implementation.

Further, the regulatory environment adds another layer of complexity, as inconsistent regulations across different states and their varied interpretations by State distribution companies (DISCOMs) have created confusion and delays in project approvals.

Despite these obstacles, market analysts believe that the current conditions are ripe for investment in rooftop solar. Globally, the prices of solar modules are falling and with the financial incentives and support offered by the government through PMSGY, the sector has witnessed favourable environment for its growth.

With over 25 financial institutions  offering loans for rooftop solar installations, solar energy has become accessible to households in tier-2 and tier-3 cities.

As per the report, Uttar Pradesh, Assam, Maharashtra, Delhi, and Madhya Pradesh lead India’s residential rooftop solar market, with Uttar Pradesh, Assam, and Delhi offering additional state subsidies beyond the central financial assistance (CFA). States with high grid tariffs, like Maharashtra, make rooftop solar more attractive due to potential savings, while the removal of subsidies in Gujarat and Haryana has hurt their rankings. Assam stands out for its favourable policies and additional subsidies, driving the highest number of applications on the National Portal for Rooftop Solar. Conversely, Jharkhand and Bihar lag due to weak implementation despite having supportive policies.

However,  government will need to address the existing challenges in the rooftop solar market to sustain its momentum. Improving the  NPRS system, expanding the domestic manufacturing of solar panels, and upgrading local electricity distribution infrastructure will be crucial steps in overcoming the current hurdles.

The Ministry of Power has proposed automatically approving projects under 10 kWp, which could help streamline the approval process, but uniform implementation across states will be key.

Some experts have also suggested temporarily relaxing the DCR requirements to accelerate installations while India ramps up its solar manufacturing capabilities.

PMSGY is a cornerstone of India’s broader renewable energy strategy, and the scheme is expected to play a critical role in meeting the nation’s renewable energy targets. With plans to install 8-10 GW of rooftop solar capacity annually, the scheme will be pivotal in achieving India’s goal of 500 GW of renewable energy capacity by 2030.

The program has also helped foster a more competitive solar market, with financial institutions collaborating with solar developers and equipment suppliers to offer integrated solutions for consumers. These partnerships are expected to further drive the sector's growth in the coming years. In conclusion, while India’s rooftop solar market has made considerable strides under PMSGY, the sector still faces several challenges that must be addressed to unlock its full potential.

With continued government support, improvements in infrastructure, and a concerted effort to resolve regulatory and technical issues, rooftop solar has the potential to become a key component of India’s renewable energy landscape, securing the nation’s energy future.

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