India's power crisis deepens as policy issues eclipse rooftop solar

A streamlined policy could have helped save coal reserves, cut emissions & averted embarrassment of dealing with frequent power crises

India’s Minister of State for New and Renewable Energy Bhagwanth Khuba launched a “Ghar Ke Upar Solar Is Super” — another of those catchily-named schemes that characterise the Narendra Modi government. It’s a nationwide rooftop solar awareness campaign with a promise to mobilise states, citizens and municipali­ties, and enable a major role for rooftop solar in the government’s renewable ambitions.

The awareness has come after eight years. The delay has cost India its first renewable target of 175 gigawatt (Gw) this year and put Modi’s 450 Gw “Panchamrit” renewable target at risk. India managed only 56 Gw of a 100-Gw solar target because of low rooftop installations, which, at 12 Gw, comprises only 20 per cent of the total solar capacity. The original plan was for 40 Gw of rooftop solar by 2022.

“The additions in rooftop solar have been slower and smaller in scale compared to ground-mounted panels,” said Manish Gupta, senior director, CRISIL Ratings. “This slower-than-targeted growth has been due to less focus by state authorities comp­ared to utility-scale solar and differing and uncertain policies at the central or state level.’’

If the country had been on track towards meeting targets, RE capacity would have greatly contributed towards overcoming the acute power shortage by substituting generation from coal — in effect saving 4.4 million tonnes of coal that could have been used to keep power plants online, said Abhishek Raj, analyst at Bengaluru-based Climate Risk Horizons, in a report. The power crisis is not due to inadequate capacity but due to coal supply constraints. Adequate rooftop solar would have ensured a surplus of power every day in April.

“Rooftop solar has great potential in India, both residential and in farms,’’ said Shriprakash Rai, head, C&I business, at Amp Energy, a solar project developer. But the business depends a lot on individual states and their policies, he added. Delhi has little control over local utilities, net metering and open access regimes that are key to onsite solar projects.

Distributed solar generation has been a critical component of big solar-producing nations such as Australia, Germany, Japan and the US. A substantial chunk of Australia and Germany’s solar generation comes from small panels installed on buildings or farms.

“We are the only large solarised country in the world where rooftop is at a very low percentage because we are hung up on the price of injection,” said Ritu Lal, vice president, Amplus Solar, an onsite solar developer. She said that utilities use tariffs from large solar projects as a benchmark without considering electricity evacuation costs. The large players may bid tariffs of Rs 2-3 per kilowatt hour to win tenders but the cost of supply to the utility is over Rs 7 a unit including transmission charges and losses from distribution.

Onsite or rooftop solar comes cheaper and is ecologically sustainable. Trans­mi­ss­ion losses are less than 1 per cent for rooftop solar and are ecologically sustainable unlike in the case of large sites in Rajasthan or Gujarat where tankers running on polluting diesel are driven into the desert to clean panels with potable grade water, Lal added.

Moreover, discoms passively discourage rooftop solar projects, which they see as direct competitors, threatening their viability. Indian power distributors owe generators over Rs 1 trillion. “States are apprehensive about consumers buying their own electricity, especially industrial and commercial consumers. So they try to limit the use of solar and renewables,” an official from a solar power developer said.

There are capacity caps in states or surcharges for rooftop solar, Rai said. For instance, in Gujarat, open access projects have contract demand restrictions with 50 per cent used for renewables. If you are a customer with a discom, you have to take a contract demand from discom, and pay fixed charges for the entire load even though part of the load is met via onsite solar and not grid power. Small industries are beholden to discoms and they do not want to get on the wrong side of the local utilities to accommodate a solar developer, an official at a developer said.

When rooftop solar started several years back, the idea was to put distributed solar in government offices with the hope that the demonstration will replicate tenfold, Rai said. That never happened, partly due to a shortage of adequate space on roofs to install the panels. A subsidy was initially available for industry but securing the dole was tough. So developers took on the risk of claiming subsidies but had a tough time getting it from government agencies on project completion.

Yet another deterrent to the proliferation of rooftop solar was constantly changing and differing policies across states, CRISIL’s Gupta said. Initially, states allowed net metering if consumers bore the operating expenses for onsite solar installations and the developer financed the project. How­ever, states such as Gujarat or Karnataka realised that what started as small 100 kilowatt systems at customer premises soon turned ten times bigger, and eight out of 10 discom customers turned to solar. That prompted states to disallow net metering. With rooftop replacing only eight to 20 per cent of energy needs, because of physical limitations, consumers were reluctant to bear capital costs, and disturb their existing relationship with discoms, Rai said.

The renewables ministry provides 40 per cent of subsidy for households to install solar, while a 30 per cent subsidy is given by Delhi to farmers to install photovoltaics (PVs) under the Pradhan Mantri Kisan Urja Sur­aksha evem Utthan Maha­bhi­yan (PM-KUSUM) scheme; ano­ther 30 per cent subsidy is pro­vided by states such as Karnataka. But there have been few takers because debt-laden small farmers are unable to afford solar, while in states like Punjab the policy of giving free power reduces any incentive for a farmer to install solar.

Rooftop solar is a low-hanging fruit. All that’s required is a clear and uniform policy across India for, say, net metering for 15 years, and a single window clearance for approvals.