Until now, the Indian solar market has been driven by incentive based utility scale projects. The contribution from the rooftop segment has been minimal. However, rising grid tariffs and frequent load shedding are now encouraging consumers to install solar in commercial, industrial and residential segments. For an overview, download our latest India Solar Handbook [download here].
- Parity has reached first in commercial segment, where tariffs are highest
- The industrial segment offers good prospects for larger projects
- The residential segment has the largest overall potential, but parity will be reached later
The adoption rate for solar is increasing in all three rooftop segments (commercial, industrial and residential). We expect the cumulative installed capacity to be 0.5 GW by 2016, growing at 33% every year.
Projected cumulative rooftop solar capacity (MW)
The commercial consumers such as malls, office spaces and retail outlets pay as much as INR 11/kWh in certain locations. These are the highest tariffs in India. Rising energy prices has been the main driver for adoption. Solar power is already cheaper than grid power for commercial consumers in Maharashtra, Delhi, Andhra Pradesh, Kerala, Tamil Nadu, Karnataka and Odisha. Electricity consumption in this segment was over 65 TWh in 2011-12.
The tariffs for industrial users are generally 10-15% lower than commercial tariffs and reach INR 8/kWh in certain locations. The industrial segment is likely to scale up later than the commercial segment. However, the high load requirement and larger available rooftop space in the industrial segment is conducive to solar projects. Additionally, the share of electricity consumption in this segment of 45% (352 TWh in 2011-12) is highest in the country. Maharashtra, Odisha, Punjab and West Bengal are fairly close to parity.
Residential power consumers are usually charged less than industrial and commercial consumers. The highest tariffs are around INR 7/kWh. Overall, this segment has the highest consumer base in India. In terms of electricity consumption, this segment is second only to industrial segment. In 2011-12, the electricity consumption was over 171 TWh. The main driver for adoption of solar is a desire in many parts of the country to become less dependent on unreliable grid power. Incentives such as net metering and capital subsidy will likely give the segment a boost. However the major acceleration will come only after grid parity is widely reached.
The Ministry of New and Renewable Energy (MNRE) offers a 30% subsidy on rooftop systems. However, the subsidy was in the past year not disbursed in a timely and reliable manner. A large pipeline of projects is still awaiting approval for subsidy. Thus, subsidies currently do not drive the market. In future, however, the scheme might get revived and promote accelerated growth of the rooftop segment.
 BRIDGE TO INDIA market analysis
Mudit Jain is a Consultant at BRIDGE TO INDIA.