1. Introduction
In the backdrop of the 2004 Hindi movie “Swades”, which focuses on the quest of an expatriate engineer returning to his roots in rural India, renewable energy generation plays the part of an apt apotheosis. It serves not only as a tool for providing an uninterrupted power supply to the village, but it also becomes a metaphor for hope, progress, upliftment and empowerment especially for the sections of society which were hitherto marginalised due to technological constraints or social stigma. Two decades have elapsed since then and India currently is on a path to becoming a four trillion economy, however, it reflects a tale of two Indias, one of skyscrapers and starvation, of wealth and inequality. Between these two shores, the country is now building a bridge backed by an energy-led transition, to make power accessible to all, and drive the mandate of domestic empowerment and growth along with international environment commitments. In this article and the subsequent sections, we look into this vision of providing empowerment in a decentralised manner to every village and every household, one roof at a time.
Projections by the International Energy Agency (IEA, 2020) indicate that as India marches on its quest to become the third largest economy in the world, energy demand in India will double by 2040. To overcome this gulf in demand and supply, India will need to leverage all possible avenues of power generation. With 1500-2000 sunshine hours per year, the tropical and geographical position of India provides a conducive ecosystem to solar power generation, positioning the country as a potential forerunner for generating solar energy as a new-age electricity source. For the country to manage its mounting climate and energy challenges, incentivizing and developing solar energy sourcing to its full potential is thus fundamental and critical.
In the 26th Conference of Parties (COP-26), to the United Nations Framework Convention on Climate Change (UNFCCC) India has set for itself a target of sourcing 500 GW, or 50%, of installed electric power capacity from non-fossil fuel-based energy sources by 2030. The Government of India has over the course of the last two decades, intensified efforts towards increasing solar energy generation and accessibility in India. The latest statistics indicate that India has an installed capacity of 90762.12 MW for solar energy as of September 2024, making it the second largest contributor to the cumulative renewable energy generation in India, next to wind energy.
One of the most identifiable strategic areas within solar energy generation is the rooftop solar photovoltaic (RTS- PV) sector. The RTS PV segment is central to India’s energy transition goals, as the country has the opportunity to tap into an overall potential of 796 GW of renewable energy generation in this sector.
The incentivisation and development of RTS PV systems in India was initiated by the Jawaharlal Nehru National Solar Mission (JNNSM) in 2010. The mission was a stepping stone in the making of a predictable regulatory regime for solar energy-led setups. At its core, the mission aimed to brand India with the term “solar India.” The vision was simple yet profound- to transition India’s economic development from fossil fuels to renewable sources of energy. The legislative intent was to exploit the solar-abundant geography of India with financing and development of off-grid solar power plants and decentralize energy resources, especially for remote rural areas. The mission, which was divided into three phases, aimed to deploy 20,000 MW of solar power by 2022; however, taking into cognisance the rapid stride of development this target was subsequently revised to 40,000 MW by 2026.
In 2015, the Government of India launched Phase I of the “Grid Connected Rooftop and Small Solar Power Plants Programme” with the objective of installing 4,200 MW of rooftop solar capacity by 2019–2020. This target was divided between projects supported by Central Financial Assistance (CFA) and without government funding, both having individual targets of installing a capacity of 2,100 MW. To further encourage solarisation of the energy sector, an “Achievement-Linked Incentive/Awards” scheme was introduced in 2016, raising the budget from INR 6,000 million in the 12th Five-Year Plan (2012–2017) to INR 50,000 million by 2020. This led to 30% of benchmark costs to be covered by CFA. The mission initially operated only with a CAPEX (capital expenditure) model, however, it introduced the OPEX (operating expenditure) model, also known as the RESCO (renewable energy service company) model or third-party financing model, in further phases allowing consumers to pay for the energy consumed without the need for upfront ownership of the solar systems.
Subsequently, in order to accelerate the diffusion and deployment of rooftop solar power within India’s energy ecosystem, Phase II of the RTS power program introduced the Sustainable Rooftop Implementation for the Solar Transfiguration of India (SRISTI) scheme. Under SRISTI, the mission aimed to integrate and develop power distribution companies (DISCOMs) as the main implementing arm and foster a conducive ecosystem for the development of solar rooftops for residential and commercial consumers. Placing DISCOMs at the forefront was intended to streamline the regulatory and technical procedures for consumers for ease of implementation, and provide DISCOMs the necessary incentives for participation.
To understand the roadmap for the development of the RTS PV ecosystem in India, we first have to delve into the various financial and operational models present in the sector. Each of these models offers its unique advantages as well as setbacks for consumers as well as the industry, the following sections give a brief glimpse into these models to help us understand and evaluate their dynamics and their role in the forthcoming RTS PV revolution.
2. Models of Rooftop Solar Power Plants
The renewable energy sector in India is still at a developmental stage and requires an outpouring of investments. It has been estimated that to meet the target of 500 GW of renewable energy installed capacity, the sector requires approximately INR 30 Lakh Crore in the form of concentrated capital investment. Given the fiscal constraints which bind the respective central and state governments, robust participation by the private sector is needed for incentivization and growth of the sector. Various private companies have answered this clarion call and are vociferous advocates of the solar revolution in the country. Over time these private entities have developed two different operational models for the development and finance of solar power plants. In the first model, called the CAPEX model, the consumer bears all upfront costs for installation of the solar plant and they own the project from its inception. Alternatively, the consumer can also opt to not pay all upfront costs from a solar power plant and only bear the operational expenditure, this is called the OPEX model. Parties opt for any of these two models for the development of solar plants based on their unique financial and commercial advantages, as discussed in detail below.
2.1. CAPEX Model:
The capital expenditure or CAPEX model is currently the most dominant approach for RTS PV installations in India. Under this model, the customer bears the cost of installation, development and operation of the solar power plant, and it offers independent and complete ownership of the solar energy project to the customer. As the power plant is owned by the customer, they are eligible to avail capital subsidies and loans, and claim accelerated depreciation on all machinery and equipment forming part of the RTS PV. It is known as a self-owned business model, wherein the owner is responsible for bearing all the risks associated with the project including the risk of operation and maintenance of the power output of the plant. However, the CAPEX model is dominant in India principally due to two reasons, firstly it is opted by residential households or small consumers with demand of less than 500 kW who are looking to reduce their electricity expenditure or claim accelerated depreciation benefits. In addition to the high upfront cost the burden of maintenance of the power plant in this model also ends up tilting this model for small consumers where operational expenditure would not incur a large financial outflow. The popularity of the model in the residential RTS PV sector is witnessed by its deep penetration in the market where it has been adopted by approximately 69% of RTS PV households in India.
While the CAPEX model is attractive when paired with government subsidies and loans along with the benefits of accelerated depreciation, it is beset with its own set of challenges. Under the CAPEX model, the customer is required to bear the risk of operation and maintenance of the power plant, which either entails availing technical knowledge or incurring additional expenditure from a power generation company. Furthermore, the CAPEX model operates on the premise that a large sum invested in the initial cycle will reap benefits over the long run with savings in energy generation, this model essentially restricts the cash outflow of the customer in the initial years and may seem too onerous for organisations. These risks of operation and maintenance coupled with the outflow of heavy capital expenditure in the initial stages prevent this model from being implemented for big projects and constraints users from expanding their units in future.
2.2. OPEX (RESCO) Model:
Due to the constraint imposed by the CAPEX model in the development of large-scale solar rooftop projects, the OPEX model was developed. Under this model, a renewable energy service company undertakes the upfront capital investment in the RTS PV project and bears all the associated risks. This company, or developer of the RTS PV, enters into a contract with a customer who allows the developer to install the RTS PV project on their rooftop space and in return they get subsidised power. This agreement usually takes the form of a long-term power purchase agreement (PPA) with a term of twenty to twenty-five years. Through these long-term PPAs, the developer gets the license to access the rooftop of the customer for installing and maintaining the power plants and the customer gets to avail solar energy at lower tariff rates than the grid tariff. Simultaneously, any excess generation beyond the quantum fixed in the PPA is sold by the developer to regional DISCOMs. The long-term PPAs ensure a profit margin for the developer and a minimum saving for the customer as compared with the grid tariff.
A utility-led business structure can expedite the process of implementation and development of projects by leveraging their technical and sectoral expertise. In addition, having a third-party developer can also help in securing finance for projects, these utilities can act as the interface between consumers and other third-party institutions, such as corporations and financial institutions, and contribute to the effective standardization of the RTS PV capacity-building process.
Utilities can leverage their expertise in energy operation and management (O&M) in the RTS PV installation process by acting as active facilitators through aggregating the interested decentralized projects and also standardizing the procurement and bidding process of the components involved. This would result in economies of scale and the organized, timely execution of the projects. Utilities can also provide access to on-billing financing to consumers under the CAPEX model. By being the intermediary between the consumer and the financial institution, Utilities can help raise debts for consumers, ensuring a low-risk profile for the financial lenders. This will lead to payment security to the banks, and simultaneously, the utilities can recover the debt amount from the consumers through repayment tools such as equated monthly instalments (EMIs) derived from the electricity credit generated through RTS PV energy projects. Utilities act as the primary interface for customers in providing energy services. They can also opt for building aggregate solar projects where interested customers are collected and the initial investment is pooled, this model will give them considerable control over the asset.
CAPEX and OPEX models can be flexibly tailored to meet the needs of the business owners and project facilitators. With the advancement in energy technologies and the rising demand for solar projects, the challenges faced by various stakeholders in RTS PV installation can be addressed by modifying and forming a mix of different and innovative business models.
In addition to the models for financing and development of RTS PV projects, there also exists variation in the development ecosystem based on the grid connectivity of projects. Based on the real-world advantages and feasibility RTS PV projects can be either grid-connected or developed off-grid with an addition of energy storage systems (ESS).
2.3. Grid Connected RTS PV project-
These projects are mainly developed in urban areas with sufficient available grid infrastructure and a demand for renewable energy to either bring down energy costs, tackle power outages or avail an environmentally friendly alternative. These projects are set up with the DISCOM where the consumer can tap into the grid in times of insufficient solar energy and in times of excess generation the surplus is fed back into the grid. To provide a mechanism for integration of the energy generated by RTS PV systems into the grid and provide benefits to the consumers the DISCOMS opt for either a net metering or a gross metering system
Net Metering: In a net-metered system, DISCOM installs a bidirectional meter or an interactive meter. This meter records both the import of electricity from the grid and the export of electricity from the RTS PV project. This enables electricity generated by RTS PV to be first utilized for domestic consumption, with any excess or shortfall being supplied to the grid. This system enables the consumer to receive credits for the energy they contribute to the grid, thus making the energy usage cost-effective. Unlike the gross metering system, net metering offers the opportunity to sell or bank the generated energy with the DISCOM, allowing users to withdraw it as required as per the policy of individual states.
Gross Metering: In a gross metered system, the DISCOM installs a unidirectional meter which only records the units of electricity fed into the grid. The consumer purchases their electricity from the grid at a retail tariff and the energy generated by RTS PV is fed in to the grid of the DISCOM. It is also known as feed-in metering. The solar energy supplied by the RTS PV to the DISCOM through the grid is compensated at a fixed feed-in tariff (FiT), which is predetermined. This accounting mechanism ensures a minimum rate of return to the consumers on their solar investments. This mechanism is beneficial for large-scale users who are charged higher tariffs by DISCOMs and thus the FiT enables them to earn returns to balance their cash outflow.
These metering mechanisms are essential parts of the operation modalities of the business models prevalent in the RTS PV sector.
2.4. Off-Grid RTS PV project
An off-grid RTS PV project operates independently of the electricity distribution grid, thus instead of balancing the excess and under production through the grid, the consumers install an ESS. Off-grid RTS PV projects are mainly constructed in remote rural areas or pastoral regions where there is a lack of stable and non-volatile electricity connections or where electricity utility services are unavailable. Due to the addition of ESS Off-Grid RTS PV projects are not dependent on the banking policies of DISCOMS, however, this feature ends up becoming a twin-edged sword as the system becomes expensive to install especially for installation in remote areas where the purchasing power of consumers is low.
In addition to the above, a combination of both on-grid and off-grid systems is also offered under hybrid systems, where the services of either of the two systems can be configured in various ways. The solar energy generated, as accounted for by the metering mechanism, can represent either an energy surplus or an energy deficit in the grid power. Both the metering mechanism and the grid connectivity system are essential and differing elements of various business models.
3. Challenges of establishing rooftop solar power plants-
The rooftop solar energy sector offers cost-effective and creative solutions to tackle challenges posed by climate change. For this energy transition to be adopted on a mass scale, the movement needs to overcome the current hurdles and have long-term financial sustenance and ready access to operational infrastructure. To identify these bottlenecks in the energy sector, and address the challenges effectively, we must examine them from a holistic perspective. Only when all the contributors and beneficiaries of the sector work in consonance can we effectively solarise our energy systems? In the following sections, we analyse some key challenges that affect the uptake of rooftop solar power in the country:
3.1. Policy and Institutional Governance
For any sector to flourish, its regulatory landscape must be predictable and it must supplement the broader vision of the stakeholders. It must be an exhaustive framework to contemplate and provide for every sector-specific issue. The current policy framework for rooftop solar power at both national and state levels is not easily manageable by individuals or entities who do not have prior experience in the energy industry. In addition to the lack of clear and consumer-centric regulations, the regulatory framework also lacks uniformity between national and state levels. For example, the regulations related to net metering differ amongst different states where some Indian states like Gujarat allow for 1 MW as the maximum capacity limit for the application of net metering, while some states like Maharashtra are shifting to reducing net metering to smaller consumers and others like Uttar Pradesh have completely withdrawn the net metering policy for all C&I consumers, with reasoning of poor financial health of the DISCOMs
Furthermore, certain states have reduced the tariffs available for selling solar energy thus reducing the benefits available for developers in the industry. The present-day RTS PV segment requires a bottom-up approach wherein consumer-centric policies are uniform and lucid. To address these problems the policies must be made and implemented clearly and transparently. A single window/digital contact portal must be made which is easy for the citizens to navigate, especially for small-scale installations. To boost investor and developer confidence, licensing and clearances must be attested and implemented in a timed manner. The major governing and institutional, sectoral bodies must be designed to facilitate stakeholders.
3.2. Sectoral and Technical Challenges
In order to devise sector-specific favourable regulatory policies, an in-depth understanding of RTS PV energy systems is important. On the industry front, the process is largely beset with three sets of technical challenges first is the existing capacity of the electricity distribution grid, second is the lack of standardisation of products and awareness among the masses, and third is the space constraint faced by rapid urbanisation in large cities. With the state DISCOMS facing the brunt of declining revenues, the electricity distribution grid is in a tardy state of affairs, with its expansion and upgradation work unable to keep up with the expansion of electricity generation in the country. The state governments need to provide creative solutions for the development of the electricity grid in the distribution sector especially in areas where grid access is sparse and where rooftop solar energy will have the maximum impact.
With the notification of various schemes by central and state governments, as discussed in further sections, the masses are slowly becoming aware of the benefits and opportunities available in the solar rooftop sector, however, the regulatory landscape has miles to go to become more consumer-centric. Rapid urbanization in cities and the consequent increase in demand for residential spaces have led to constrained access to rooftop spaces. Consumers living in residential arrangements, such as apartments, share a common roof and lack dedicated roof spaces for installing RTS PV. Aggregating small-scale consumers for these situations provides a viable solution as combining the varied usage profiles of consumers may decrease installation costs for the developers. However, these small-scale projects, when aggregated, incur additional due diligence fees for developers or RESCOs in situations where the state government frequently changes regulations.
Additionally, the policies of the central government to promote domestic manufacturing of solar components have led to the imposition of steep customs duties. It has increased procurement costs for solar components creating additional barriers for businesses trying to tap into the RTS PV market. There are also supply chain inefficiencies in the market which hinder capacity building in the industry. The traditional outlook of DISCOMs has caused a slowdown in the incorporation and adaption of new energy business models. Already being financially burdened by long-term non-renewable energy PPAs and debt-ridden finances, the DISCOMs have been reluctant to transition from unidirectional grid systems to consumer-focused, self-generating energy models.
These sector-specific challenges can be solved through a combination of innovative and supportive business models. Virtual net metering is a digital setup that enables customers without roof space and on-site RTS PV installation to benefit from RTS PV energy. Consumers are aggregated, and their energy usage is adjusted against each other through a digital setup while they share energy from a single energy provider. This system digitizes the whole energy service process and makes it less cumbersome for the consumers as well as the utility services providers and developers. The aggregator model also acts as an advantage to the utility by diversifying its business, penetrating the RTS PV segment, and helping to decongest the overly burdened electricity grids.
3.3. Finance and costs
Every sectoral transition demands huge investment to support a seamless shift. The energy transition is necessitated by climate risks and increased energy appetite. To incentivize this gradual shift, the costs of transition must align with consumer affordability while ensuring ease of doing business. Given the high share of imports in solar components, the cost of RTS PV installation is steep. There is a dearth of capital in businesses as well as DISCOMs where one tries to reduce its electrical costs and the other tries to retain consumers. The Small and Medium Enterprises (SMEs) and Micro, Small & Medium Enterprises (MSMEs) lack funds to sponsor RTS PV and do not have easy access to credit due to low credit profile and payment default risks.
To meet the challenge of high up-front costs, the sectoral players require external financial support schemes. The central and state governments need to provide incentives to financial institutions for supporting small-scale solar rooftop projects and aggregator projects and detract them from charging high interest rates.
Simultaneously consumers and small-scale industries should be made aware of lending schemes thus increasing consumer participation in RTS PV installation. A strong finance mechanism will boost investor confidence and increase corporate sourcing. In addition to domestic financial institutions provision of concessional loans offered by international institutions, such as the Asian Development Bank, which in July 2024 approved $240.5 million in loans to finance RTS PV installations in India, also are pivotal in assisting national governments to expand solar energy supply.
4. Schemes and benefits available in leading states in India
The regulatory framework surrounding RTS PV installations has been consistently amended and supplemented as per the industry and market requirements. Internationally followed practices are also often incorporated and tailored to suit the Indian-market conditions. While as per the provisions of the Electricity Act 2003 state governments are largely responsible for regulating RTS PV installations in their regions, the central government also notifies schemes and policies to set the tone, provide incentives or act as umbrella schemes under which state regulations are accordingly subsumed. In the following sections we analyse the state-wise regulatory landscape of the three leading states in India with the largest cumulative rooftop installations.
4.1. Gujarat
With a semi-arid climate and ample sunlight, Gujarat is making effective use of its geographical attributes to boost its solar energy projects and is the leader among states, accounting for 27.3% of cumulative solar rooftop installations. With an installed capacity of approximately 14,745 MW, Gujarat stands as the country’s second-largest solar energy-producing state after Rajasthan. Remarkably, despite comprising only 5% of the nation’s population, the state is home to about two-thirds of the residential solar energy systems installed across the country. In September 2024, the Gujarat government further solidified its commitment to sustainable energy by launching an initiative aimed at installing solar rooftop systems on government buildings, allocating ₹177 crores for this program with a target cumulative capacity of 48 MW.
In Gujarat, residential consumers now easily access India’s grid-connected rooftop solar systems through the newly-designed ‘National Portal for Rooftop Solar‘, which provides a highly streamlined process to individuals seeking subsidies on solar installations. Consumers can avail up to ₹ 30,000 per kW for projects having capacities between 1kW and 2kW. For projects aggregating more than 3kW, consumers are provided a subsidy of ₹30,000 per kW for the initial 2kW and an additional ₹ 18,000 for the additional kW. Solar projects having a capacity of more than 3kW can avail subsidy of a maximum amount of ₹ 78,000.
To accelerate the adoption of solar energy across various sectors, the Gujarat government introduced a comprehensive Solar Policy in 2021. This policy seeks to encourage a transition to solar power among consumers by removing capacity ceilings on all types of solar projects and the earlier capacity of 50% contracted load, thereby allowing greater flexibility in project sizes and adoption of rooftop projects for a wide range of consumers.
Consumers under the Solar Policy can also lease their rooftops or properties to third-party developers for developing solar energy projects. The policy also provides the benefit of net metering for residential consumers and Micro, Small, and Medium Enterprises (MSMEs), assuring that in the first five years after installation, excess electricity will be bought by the state government at a set rate of ₹2.25 per unit. After this preliminary period, the tariff would be revised to 75% of the latest competitive tariff discovered by Gujarat Urja Vikas Nigam Limited (GUVNL). Additionally, the policy outlines expected savings by different consumer categories and projects that residential consumers would likely save between ₹1.77 and ₹3.78 per unit. The policy also allows industrial and commercial consumers to expect a saving between ₹0.91 and ₹4.32 in units depending on their consumption pattern and the nature of sale agreements entered by the developers.
4.2. Maharashtra
Maharashtra has solidified its position as a leading state in India’s rooftop solar revolution, ranking second in cumulative rooftop solar installations, just behind Gujarat. The state contributes an impressive 13.3% to the country’s total solar photovoltaic (PV) capacity. Although it does not give a specific state-level solar subsidy, it offers the Central Financial Assistance (CFA) scheme to all individuals who choose an on-grid or hybrid system. Under this structure, the state has defined a subsidy allocation that is as follows: for systems up to 2 kW, consumers are given ₹30,000 per kW, and for installation of capacity of 3 kW and above the available subsidy is capped at ₹78,000. Furthermore, under the newly promulgated MERC (Grid Interactive Rooftop Renewable Energy Generating Systems) (Second Amendment) Regulations, 2024, the Maharashtra Electricity Regulatory Commission has increased the maximum cap for net metering to 5MW from the earlier cap of 1 MW it has also allowed for innovative metering solutions like group net metering, virtual net metering and collective arrangements for housing societies.
Maharashtra’s commitment to renewable energy was further reinforced with the launch of its Non-Conventional Energy Generation Policy 2020 on December 31, 2020, which is set to remain in effect until March 31, 2025. This is an integrated policy that brings a sea change into the energy scenario of the state with an aim to add 12.9 GW in solar power to the existing 1.9 GW by FY 2025. Strategically expanding in this manner, Maharashtra, earlier dominated by wind power, will emerge as a completely solar-centric state.
One major aspect of the scheme is the annual deployment of 100,000 solar pumps dedicated to agricultural purposes and, probably, over the course of the next five years. This will thus provide a high likelihood of improving the agriculture sector while lowering dependency on fossil fuels. The Maharashtra government has pledged to open up solar energy to almost 10,000 households every year, keeping the objective in mind of alleviating the power supply deficit and encouraging the adoption of renewable sources of energy among the people.
The policy further assumes major fiscal commitments toward off-grid solar initiatives as it is assumed that the state will open 2,000 solar-powered water supply systems and provide electricity to 10,000 rural dwellings. Moreover, the policy encourages microgrid projects for 20 homes each, and it also includes investments in solar water and cooking systems covering 55,000 square feet.
4.3. Rajasthan
Rajasthan, while ranking third, accounts for 8.1% of cumulative solar rooftop installations in India. In 2023, Rajasthan unveiled its Renewable Energy Policy 2023 with the ambitious goal of achieving 90 GW of renewable energy capacity by 2030, including 65 GW from solar power. This initiative is aimed at driving significant economic growth, creating an estimated 111,000 jobs in the state. The policy emphasizes that programmes of rooftop solar installations, off-grid solar alternatives, and local manufacturing initiatives will be further scaled up, maximizing the state’s renewable energy potential. The state of Rajasthan is also targeting wind-solar hybrids to cater to the capacity demands of such an extent.
In February 2024, the government of Rajasthan announced a very important development as it notified the net metering cap at 1 MW. It allows large commercial and industrial establishments to sell any surplus electricity back to the grid, thus improving their earning potential from excess power generated. The increased limit for net metering is likely to reinvigorate business and industrial interest in using solar energy.
Under the renewable energy project of the Rajasthan Investment Promotion Scheme, 2019, project developers are exempt from stamp duty and land tax for the initial seven years, which helps in making project development costs cost-effective. In addition, there is a 90% subsidy on the levy of State Goods and Services Tax (SGST) for the production of solar, wind, and hybrid energy equipment, alongside a 50% employment subsidy to further encourage investment. Megaprojects in the renewable energy sector can also apply for a customized package of incentives to bolster their development.
As applicable across India, under the National Portal for Rooftop Solar, consumers in Rajasthan can apply for subsidies, with the following rate: For installations between 1 kW and 2 kW, the rate is ₹30,000 per kW, whereas systems of 3 kW get ₹30,000 per kW for the first 2 kW and ₹18,000 per kW for the additional capacities. For installations greater than 3 kW, a flat subsidy of ₹78,000 is provided.
4.4. Central Policies for rooftop solar plants
In recent times, the government of India has sought to increase renewable energy consumption by infusing budgetary allocations in the sector.
On February 29, 2024, Government of India issued an official notification on PM Surya Ghar Muft Bijli Yojana. The scheme is a revolutionary initiative set to increase the solar rooftop capacity in residential spaces and enable electricity self-generating facilities for household establishments. This program, with a budget of ₹75,021 crores, is supposed to be undertaken throughout the financial year 2026-27. It provides a comprehensive financial assistance scheme worth ₹65,700 crores for technical support to residential solar installations. Funds allocated also include capacity building, awareness programs, and service charges, at ₹657 crores for each.
This move charts a set of quite ambitious goals. The scheme aims to establish one crore rooftop solar systems at all homes, which will automatically enable the dissemination of free electricity to households that consume less than 300 units per month. Over their long lifespans, the collective capacity is expected to produce an impressive aggregate of 1,000 billion units of renewable electricity, which otherwise would contribute to a decline of around 720 million tons of CO2-equivalent emissions.
Apart from the important benefits to the environment, the policy aims for reviving local economies and jobs created and improved energy security. In fact, it aligns with India’s monumental commitment under the Paris Agreement to support building 30 GW of rooftop solar capacity by 2026-27. It is explicitly drafted so that it would allow grid-connected solar installations on rooftops meant for residential customers, and it quite clearly places other sectors, excluding governments, commercial, and industrial entities, as not covered under central financial assistance. Instead, it is proposed that the States and Union Territories Governments give the benefit of an extra subsidy to the residential sector, provided they satisfy the scheme conditions.
It encourages the RESCO model, under which third-party financiers undertake the funding, installation, and operation of solar energy systems. Under this model, the installed solar systems remain owned by the RESCO, while the rooftop owner enjoys compensation for the use of their rooftop. The electricity generated is sold either to the retail consumer or to the local DISCOM under long-term contracts called PPAs. Installations under the RESCO model will receive cash incentives after the installation and commissioning of the systems, and cash incentives shall be awarded based on the capacity of each residential unit. The initiative will be further strengthened through the National Portal, which aims to provide a comprehensive experience for consumers applying for net metering, load authorization, and system evaluation. The portal will have GIS-based functionalities to aid the decision-making processes of consumers and suppliers. It shall also provide linkage with the PM-Gati Shakti Portal to ensure that power system planning is done efficiently.
A vendor registration portal will enable organizations to update the list of services they provide, while the portal will rate vendor performance and hence provide the architecture for ensuring transparency and accountability. National Programme Implementation Agency (NPIA) will oversee the program in close collaboration with State Implementation Agencies tasked with conducting thorough inspections at the time of commissioning and, after that, ensure that these systems are functioning as intended.
5. Conclusion
The governments at national and state levels are increasingly instilling a new vision and promulgating new policy learnings from R&D by observing internationally successful sectoral models. The regime understands the potential of RTS PV installations and its decentralized character, through which it democratizes energy access, empowers communities and equally provides the benefits of decarbonization to all interested stakeholders. With access to easy, widespread adoption across both urban and rural areas, RTS PV can also significantly reduce the need for extensive long-distance transmission infrastructure thus alleviating the financial distress of DISCOMs. Localization of energy systems caters to the problem of lack of landmass and persistent problem of energy losses in grid transmission by generating electricity close to the point of consumption.
In contrast to traditional energy systems, the RTS PV installations come with fewer regulatory and capital expenditure concerns. Rooftop installations leverage the existing dedicated rooftop space on residential or commercial buildings, promoting various aggregator models. Large-scale solar projects are associated with regulatory hurdles and paucity of capital due to the requirement of huge land acquisition. On the other hand, RTS PV installations harness solar power on the already existing infrastructure. RTS PV also promotes land conservation by utilizing rooftops and preserving land space for other essential activities like agriculture. The private sector must take the lead role in integrating various business models in RTS PV installations that distribute the benefits of installation equally to all the stakeholders involved As India strives to build a sustainable future, harnessing the sun can significantly contribute to the nation’s energy security while promoting social equity. By investing in and prioritizing solar rooftop projects, India can pave the way for a cleaner, more inclusive energy landscape that benefits all citizens. It will ensure that the dawn of a new India is seen on every rooftop making the solar power future not just about energy, but also about empowerment and building resilience amongst all communities in the country.
About the Authors:
Anurag Mawai is an advocate practising in the field of infrastructure and energy laws, and Mansi Kapoor is a 3rd Year student at Rajiv Gandhi National University of Law, Punjab.
Editorial Team:
Managing Editor: Naman Anand
Editor in Chief: Abeer Tiwari and Harshita Tyagi
Senior Editor: Adhya Sarna
Associate Editor:
Mansi Kapoor
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