Despite subsidies rooftop solar still too expensive: study

Currently the cost of installing a 1-2 KW system is about ₹43,000 per unit, according to MNRE estimates.

November 16, 2023 10:48 pm | Updated November 17, 2023 08:10 am IST - NEW DELHI

“To improve rooftop adoption, perhaps greater incentives are needed for the segment of consumers with the lowest (electricity consumption) of 0-1 kilowatt.”

“To improve rooftop adoption, perhaps greater incentives are needed for the segment of consumers with the lowest (electricity consumption) of 0-1 kilowatt.” | Photo Credit: S.S. Kumar

India’s low uptake of rooftop solar systems – often touted as the pathway to clean, decentralised electricity –is largely due to limited electricity consumption and existing subsidies for coal-fired electricity that makes even subsidised solar power expensive, suggests the results of a first-of-its-kind study spanning 14,000 households across 21 states.

The analysis was conducted by researchers at the Council for Energy, Environment and Water (CEEW), a Delhi-based thinktank and made public on Thursday.

Were all rooftops in India’s estimated 25-30 crore households to have solar panels installed, it would amount to 637 gigawatt (1 gigawatt (GW) is 1000 megawatt (MW)) – or about five times the total renewable energy capacity already installed. However were solar panel installations restricted to account for the electricity actually consumed by households, this would fall 80% to about 118 GW. India currently has about 11 GW of installed rooftop solar capacity, of which only 2.7 GW are in residential units and the rest in commercial or industrial spaces. The government aspired to a target of installing 40GW.

Thus, the subsidies notwithstanding by the Ministry of New and Renewable Energy (MNRE), the main promoter of clean energy adoption, rooftop solar systems are still too expensive for the vast majority of Indian consumers of electricity, according to the analysis.

“Approximately 80%-85% of consumers use about 1200 units of electricity annually of which a large part is already free due to state subsidies (on electricity),” Neeraj Kuldeep, Senior Programme Lead, CEEW, and one of the authors told The Hindu. “To improve rooftop adoption, perhaps greater incentives are needed for the segment of consumers with the lowest (electricity consumption) of 0-1 kilowatt.

Currently the cost of installing a 1-2 KW system is about ₹43,000 per unit, according to MNRE estimates. Units up to 3KW are eligible for a subsidy of about ₹14,000 per unit.

More than 60% of technical potential is concentrated in seven states in India. A significant decline in technical potential (or the amount of solar power that can be feasibly installed) is witnessed in states such as Assam, Bihar, Odisha, Madhya Pradesh, Rajasthan, Jharkhand, and Uttarakhand due to the high share of households with low energy consumption per sq ft, the study notes.

Moreover, rural areas show higher technical potential based on residential rooftop area (363 GW) compared to urban areas across states (274 GW).

“India’s solar energy revolution–going from 2,000 MW of solar power capacity in 2010 to 72,018 MW now–must reach households too to reach its full potential,” Arunabha Ghosh, CEO, CEEW, said in a statement, “But to get there, residents must get the right price and attractive incentives and enjoy a convenient experience, which can then spur the markets to create the right products and capacities for homes.”

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