Corporate Corner – October 2023

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Rooftop solar surge

India’s rooftop solar capacity is projected to mark a surge, with about 4 GW expected addition during the fiscal year 2024. Recent months have already witnessed an impressive growth, with close to 2GW added between April and July 2023 alone. This trend, driven by falling costs of solar modules, is expected to sustain and drive the momentum in the medium term.

Gujarat, Andhra Pradesh, Telangana and Delhi are said to provide conducive environments for setting up rooftop solar projects, specifically catering to commercial and industrial customers. However, Tamil Nadu and Uttar Pradesh have slowed the transition of high-paying commercial and industrial consumers to rooftop solar.

MSMEs offer substantial potential in the rooftop solar market, thanks to the availability of improved financing options. A notable development is the approval of a credit guarantee mechanism by the World Bank, which could inject fresh momentum into financing for MSME rooftop solar projects.

Despite this growth, the market faces regulatory hurdles, including uncertainties and a lack of support from local electricity distribution companies (DISCOMs), forcing some developers to shift focus or exit the solar business entirely. To boost the rooftop solar market, a report by JMK Research & Analytics and Institute for Energy Economics and Financial Analysis recommends establishment of renewable purchase obligations for rooftop solar and to permit behind-the-meter rooftop solar systems to aid DISCOMs in load forecasting. Moreover, the central government is encouraged to issue uniform regulatory provisions akin to the Green Open Access Rules.

Battery energy storage systems, virtual net metering and peer-to-peer trading have also been identified as important areas to foucs on. Virtual net metering enables multiple consumers to aggregate and access solar power from a single plant, improving project financing and availability. P2P trading, on the other hand, allows consumers within the same DISCOM jurisdiction to exchange excess solar power, potentially reducing distribution losses and opening new revenue streams for DISCOMs. These technologies would align with changing electricity pricing models and encourage more economic integration of rooftop solar systems.

The report underscores that despite challenges, when supported by favourable policies and regulations, India’s renewable energy landscape holds great promise.

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