BSES9 Rajdhani Power Limited (BRPL) of Delhi and the Kerala State Electricity Board (KSEB) have executed the two most distinct cases of the DISCOM-centric approach. Table 8 describes the key features of the popular and unique DISCOM-led rooftop solar models in the two states.
Delhi’s DISCOM-led rooftop solar experience shows that rooftop solar installations made a net positive impact on the DISCOM (BRPL). Specifically, it aided in reducing the wire losses of the DISCOM and prevented the low-voltage distribution network from being congested, especially during peak summer days.10
Implementing a DISCOM-centric model successfully necessitates a forward-thinking approach from the DISCOM. It is a prerequisite that the DISCOMs’ overall financial and operational performance be, at the very minimum, moderately good.
Unfortunately, however, most of India’s DISCOMs do not have sound infrastructure and financial health, leading them to resist the facilitation of rooftop solar installation in their respective network areas.
All the business models discussed so far have a certain degree of involvement from the respective DISCOMs. However, a niche model without any DISCOM involvement exists –the plug-and-play model.
A plug-and-play system can be purchased, installed and made fully operational within three days. It has a battery storage component and is designed for 100% self-consumption.
Currently, the plug-and-play model has an insignificant share in the Indian residential rooftop solar market. However, we expect the market demand for this model to increase considerably in the long term.
Though the residential rooftop solar market prospects look bright, it will require additional effort from policymakers, suppliers, etc., to develop the market further. Henceforth, we describe some potential measures that could facilitate this development.
Minimising DISCOM Intervention
DISCOMs’ role as implementing agencies for subsidy-linked projects is a conflict of interest for them. When a consumer installs a rooftop solar system, the DISCOM stands to lose revenue. Given the highly distressed financial state of India’s DISCOMs, the latter would inherently oppose its customers’ solarisation initiatives.
Thus, it is imperative to limit the DISCOMs’ involvement in adopting residential rooftop solar systems to a considerable degree. For example, with regard to a net metering connection, a DISCOM’s responsibilities need to be restricted to only the inspection of solar plants and sealing of the net meters.
Efficient Subsidy Disbursal to Consumers
Adopting the DBT mechanism for the transfer of subsidies was long overdue. Now, it is imperative that government agencies implement this mechanism effectively. Transparency with regard to the DBTs and timely disbursement of the subsidy is critical to sustain, if not augment, the market demand in the near future.
Digitisation of Consumer Experience
The whole of a rooftop solar solution, especially for the residential segment, needs to be accessible on digital platforms, considering the residential market is still in a nascent stage. It is necessary to provide a completely digitised and transparent customer experience, right from registration to issuance of meters, emulating the Gujarat model.
Along with pre-installation digital tools being available with select financiers, it is important to have post-installation performance monitoring tools available with the FIs. The data thus collected and collated by such a digital tool can be relayed to customers to assure them of the performance quality of the rooftop solar solution (including O&M activities).
Enhance Back-end Infrastructure and Channel Partner Networks
Strong back-end infrastructure is critical for tightly bundled product offerings with seamless financing service, performance guarantees and other original equipment manufacturers’ (OEM) commitments.
It is a key requisite to build a wide local network of well-trained channel partners strictly monitored by developers or EPC companies. This will ensure the delivery of quality products and services and, more importantly, frugal and viable rooftop solar solutions.
Building a Rooftop Solar-Friendly Ecosystem
Going forward, updating the relevant policies and regulations with a forward- thinking approach is essential. Each state and UT must revise their building codes to mandate solar installation-capable buildings. Furthermore, the amended building codes should be tailored to streamline the procedure of adding BESS in residential buildings.
In time, residential solar+BESS will be a significant boon for the grid. Harmonized solar+storage power can help in supporting the grid during peak demand periods.
The Indian residential rooftop solar segment is at the cusp of a robust growth phase. From the 2GW cumulative installed capacity (as of FY2022), the residential market will likely reach 3.2GW by FY2023. Enhanced policy incentives and substantial growth and advancement in the demand and supply side of the market will drive the expected 60% year-on-year rise in installations.
So far, residential installation under the central government’s rooftop solar programme has been subpar. However, the new simplified subsidy scheme (introduced by the centre in July 2022) has the potential to significantly catalyse the growth of the installed capacity in the residential segment. In addition, the new CFA scheme will allow residential consumers to buy rooftop solar systems from any registered supplier of their choice. This broadens consumers’ options for quality products and services. Further, the provision of the DBT mechanism will help smooth the subsidy disbursal process as it removes the DISCOM from the subsidy equation.
Concerning the residential solar regulations, all DISCOMs must grant net metering approvals to the consumers within a strict and short timeline. In the case of residential rooftop solar systems, DISCOMs, in general, need to be restricted to carrying out two activities: inspecting solar plants and sealing the net meters.
The key drivers of the demand side of the market, apart from government subsidies, are the brightening prospect of savings on electricity costs and heightened consumer awareness. To augment the demand of the residential market in the future, it will be critical to promote the communication of relevant and simplified information through digital media (as in the case of Gujarat’s SURYA scheme). In addition, there is a need to disburse standardised loans for residential rooftop solar solutions. This warrants reliable digital tools for FIs for market assessment, pre- and post-installation monitoring of solar plants, etc.
The residential rooftop solar market’s supply side is currently far from being adequately developed. Very few established brands (such as Tata) offer highly reliable residential solutions. The market’s entire value chain (covering business aspects such as financing, insurance, equipment supply, installation, O&M, etc.) needs to enhance to provide quality rooftop solar solutions. In this respect, the simplified subsidy scheme is a booster to the sales and service infrastructure of the residential market. Further, suppliers’ integration or bundling of multiple business aspects could ease the consumer buying process.
Notably, there is an increasing trend of adoption of ‘high-quality and highly aesthetic’ rooftop solar systems. However, there is a lack of domestically manufactured high-wattage modules that high-end residential systems can use. Another emerging trend is the adoption of battery storage systems in the residential solar segment, especially in areas of low power reliability. We expect the use of BESS-integrated solar systems, such as plug-and-play systems requiring no DISCOM involvement, to become mainstream in the long term.
It is imperative that the existing supply chain infrastructure upgrades to enable the seamless adoption of future mainstream technology such as BESS. This calls for the implementation of forward-looking initiatives by relevant policymakers, suppliers, DISCOMs, and other stakeholders in the future. …Concluded
Akhil Thayillam is a Senior Research Associate at JMK Research. A renewable sector enthusiast, he has experience in tracking new sector trends as well as policy and regulatory developments.
Jyoti Gulia is the Founder of JMK Research and has about 16 years of rich experience in the Indian renewable sector. Her core expertise includes policy and regulatory advocacy, assessing market trends, and advising companies on their business strategy.
Prabhakar Sharma is a Senior Research Associate at JMK Research with expertise in tracking the renewable energy and the battery storage sector. Previously, he worked with Amplus Solar.
Vibhuti Garg is an Energy Economist and the Director, South Asia, IEEFA. She has advised private and public sector clients on commercial and market entry strategies, investment diligence on power projects and the impact of power sector performance on state finances. She also works on international energy governance, energy transition, energy access, reallocation of fossil fuel subsidy expenditure to clean energy, energy pricing and tariff reforms.