In its target year, India has achieved only about half of its seven-year target of 100 GW of cumulative solar capacity. The drag in this is the solar rooftop segment, which has seen uneven capacity addition and policy U-turns.

In 2015, a year after it came to power, the BJP-led government set a target of 100 GW (gigawatt) of solar energy capacity by 2022, a five-fold increase. By 2021, India had installed only 50.5 GW, according to Bridge to India, a renewable energy consultancy. The big drag is a sub-segment called ‘solar rooftop’—panels mounted on top of commercial, industrial and residential buildings.

Of the 100 GW, 60 GW was to come from utility-scale solar plants, which stood at 41.7 GW, or 70% of the target, by 2021. The rest was to come from solar rooftop, which has managed only 8.9 GW, or 22% of its target. This sub-segment added just 1.4 GW in 2020 and 2.2 GW in 2021.

The deficits matter in the context of India’s solar vision. Solar is the key driver in India’s move towards green energy, and to cut its CO2 emissions intensity to 33-35% of its 2005 levels, as per the Paris agreement. More solar in its power portfolio would also help address the air pollution problem: India has 63 of the world’s 100 most polluted cities, according to IQAir.

One reason why India has struggled to achieve its solar targets is what Crisil Research terms an “unstable policy environment". “This is evident in the growing incoherence between the policy thrust on renewable energy on the one hand and the actual action by implementation agencies like the Solar Corporation of India (SECI) and state distribution companies on the other," it said in a 2019 report.

These issues show up in varying progress levels recorded by states. About 35% of the installed capacity in solar rooftop is from just the top three states, and around 50% comes from the top five. Geographical advantages only partly explain the differences. For example, Jammu and Kashmir and Andhra Pradesh are among the top five states in solar potential, according to the National Institute of Solar Energy (NISE). But neither features in the top five by installed capacity in the commercial and industrial segments, for which state-wise data is available.

Similarly, Tamil Nadu is among the top five by installed capacity, but has lower solar potential, as per the NISE ranking. In these two segments, Maharashtra, Gujarat and Rajasthan have each added over 200 MW of solar rooftop. Gujarat has also made significant progress in the residential segment, after it introduced a 20-40% subsidy on the cost of rooftop solar systems for small installations (up to 10 kW).

In the last two years, the residential segment, and not the commercial and industrial segments, has driven new capacity in solar rooftop. According to Bridge to India, the share of residential in new capacity increased from 11% in 2017 to 34% in 2021. It was slow to pick up primarily due to a lack of awareness. While that has been addressed to some extent, there are other barriers.

One barrier is ‘net metering’, which lets consumers use the solar power they generate and be billed only for the additional power they draw from the grid. In 2021, the Centre introduced guidelines to lower the rooftop threshold for net metering to 500 kW in 2021, and several states followed suit. This made solar rooftop less attractive, especially to large and medium industrial consumers. A basic customs duty on imported solar cells and modules, which came into effect this month, also impacted the economics of solar projects whose implementation got delayed by the pandemic.

Although India is likely to miss its 2022 target, it might still achieve its broader green ambitions, and also the goal of solar power. For example, the basic customs duty was imposed to encourage domestic manufacturing of solar cells and modules, currently being imported primarily from China.

Demand for solar cells and modules is picking up globally. Bloomberg New Energy Finance expects global solar capacity to increase from 183 GW in 2021 to 252 GW in 2025 and 334 GW in 2030. China has been leading the race in solar: from just 4 GW of solar rooftop capacity in 2016, it expanded to 19.4 GW in 2017 and to 27.3 GW in 2021, according to Rystad Energy, a research firm. The key to India’s success in this domain will be in aligning its policies to intent, while building its manufacturing base.

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