Over the past two years, the rooftop solar market in India has grown at a compounded annual growth rate of 90%. As of March 31, 2016 the cumulative installed capacity stands at 740 MW (refer INDIA SOLAR HANDBOOK 2016). This growth is directly linked to the improvement in price competitiveness of rooftop solar power vs grid power.
Commercial and industrial (C&I) segment makes up almost 73% of the market, leaving the remaining 27% for the residential segment. As viability improves, we expect industrial rooftop segment to account for the fastest expansion at an annual growth rate of 248% until 2020.
Tamil Nadu leads the installations due to high consumer awareness and lack of reliable grid power. Gujarat comes in second place and here the rooftop market has been primarily driven by state government initiatives. Maharashtra comes in third driven by high consumer tariffs across all consumer categories is very high.
Around 87% of all rooftop capacity in India is based on the CAPEX model while about 13% (102 MW) is based on the OPEX/ RESCO model. However, the OPEX based project market is showing a year on year growth of about 150%, and is expected to take up a higher market share as the market matures. In other developed countries like the US and UK, the OPEX model is a preferred choice for consumers.
Figure 1: Rooftop solar market capacity in India, MW
Source: BRIDGE TO INDIA research
Despite the impressive growth, the market is still way behind on achieving the 40 GW rooftop capacity target for 2022. This is especially true if we compare it to the success of the utility scale solar segment. The key challenges that the government needs to address are improving net metering policy framework and cost/ availability of financing for consumer and start-up RESCO’s. Consumer education remains another major hurdle for the sector.