The trend in distributed PV deployment in upcoming quarters is expected to provide a clear picture of whether India has transitioned from the initial phase of adopting the technology
India is seen as a prominent candidate to take the global solar story to new heights due to increasing deployment and a favourable policy environment. Representative photo: iStock. India is one of the countries most exposed to extreme temperatures, with mercury levels soaring over 40°C in many parts. The temperature rise directly impacts electricity demand, testing the power grid’s ability to accommodate seasonal spikes in consumption.
To manage this, the Ministry of Power (MoP) has mandated that all thermal power plants using imported coal operate at rated capacity during summer. A similar notice was issued last year to cater to rising demands during the summer season.
India witnessed its sharpest rise in annual electricity generation since 1990 in 2022-2023, reported Reuters in April 2023. The Indian electricity grid fulfilled a maximum demand of 215.88 gigawatts (GW) in a single day on April 18, 2023, according to the data.
MoP expects the peak power demand to reach 230 GW before the rainy season. While the country manages to cater to the growing demand, it struggles to bridge the peak power deficit. India’s peak deficit rose to 4 per cent in the first three quarters of the financial year 2022-2023 compared to 1.2 per cent in 2021-2022.
Read more: Full coverage: State of renewable energy in India
The country is implementing several policy measures, such as increasing power generation capacity, upgrading and expanding transmission lines and strengthening the distribution networks to fulfil its long-term energy policy goals.
The policy measures should ensure the power sector is prepared to meet the challenges unfurled by changing weather patterns and ensure uninterrupted power supply regardless of the weather conditions.
While large-scale infrastructure development will happen at its own pace, additional measures such as demand-side management, distributed generation and incorporation of storage technologies are required to cater to rising demand.
Distributed generation systems present a potential solution that can be implemented expeditiously to address the mentioned issues.
Solar photovoltaic (PV) is a leading choice among all distributed generation technologies due to its numerous benefits. PV systems have no moving parts and require minimal maintenance, are eco-friendly, can significantly reduce electricity bills and create employment opportunities and skill development.
Besides, small-scale PV systems installed at the tail-end of the distribution network help avoid congestion in distributed networks and postpone immediate infrastructural upgrading needs.
The Centre has been supporting the installation of small-scale distributed PV systems through various government incentives such as capital subsidy and accelerated depreciation.
The capital subsidy covers up to 40 per cent of the cost of the solar system, making it an attractive option for those looking to reduce their energy bills and carbon footprint. In addition, state-wise metering and billing policy mechanisms, such as net metering, gross metering and virtual metering, allow consumers to feed excess electricity back into the grid and receive credits on their electricity bills.
Consequently, the metering and billing mechanisms further reduce the rooftop PV system payback period, making it a financially viable investment option for customers.
India has witnessed massive solar PV deployment since 2010, with the number of engineering, procurement, and commissioning businesses involved in installing large-scale solar power plants growing multifold. Despite this development, the growth of the distributed PV sector is of concern, as the share of distributed PV capacity in total PV capacity has been marginal and needs significant change in the near future.
India is the fifth-largest country in the world in terms of installed capacity of solar PV systems, after China, the US, Japan and Germany.
Of the overall PV capacity in 2021, the share of distributed PV capacity accounted for 35.1 per cent in China, 34.7 per cent in the US, 61.5 per cent in Japan and 81.4 per cent in Germany, according to the IEA-PVPS Trends Report 2022.
The share of distributed PV capacity in India remained modest at 14.7 per cent by December 2021, according to the Ministry of New and Renewable Energy data. It further decreased to a mere 14.2 per cent as of March 2023.
In 2015, India had set a target of adding 40 GW of solar PV capacity through rooftop PV systems by 2022. However, the country installed only 8.87 GW of rooftop PV capacity by March 2023.
Read more: India’s renewable energy capacity at 100GW, still far away from 2022 target
Despite the low capacity addition, the rooftop PV sector has created a skilled workforce and a supply chain in the domestic market. The trend in rooftop PV installation suggests that the market is poised to grow rapidly in the coming years, as around 15 per cent of the 8.87 GW capacity (1.36 GW) addition since 2015 was added only in the last six months.
The accelerated deployment can be attributed to consistent policy support, consumer awareness and falling PV system costs. However, the increased deployment rate has been observed over a relatively shorter timeframe. It requires a longer duration to ascertain that it is a sustained trend, not a transient surge.
The US, Japan, Germany and China have been leaders in PV technology over the last few years. India is seen as a prominent candidate to take the global solar story to new heights due to increasing deployment and a favourable policy environment.
The recent governmental efforts to boost domestic PV production and undertake GW-scale auctions are seen as steps in the right direction. However, achieving higher deployments without considering distributed PV systems will be challenging.
While we track the emerging trend of rooftop PV installation, we need to remain prepared with appropriate policy intervention, if required, to ensure that the growth story is not impacted.
At the same time, we need to reconsider the scope of existing rooftop PV policies to capitalise on innovative installation approaches and effectively harness the benefits. Specifically, it is imperative to broaden our understanding of distributed PV systems beyond conventional rooftop style and develop a supportive environment that facilitates early adopters with alternative approaches such as building-attached PV (BAPV) and building-integrated PV (BIPV) systems.
Currently, the capital cost of building-attached PV systems varies case-to-case. It can be installed at a price nearly equal to centralised PV systems. However, some BAPV systems can cost three times more than centralised systems due to site-specific conditions. The BIPV systems can cost up to eight times that of centralised PV systems and need price-reduction efforts.
The government’s dedication to promoting clean energy and active participation by stakeholders in cost reduction efforts for BAPV and BIPV systems, bringing them into mainstream business, will enhance investor confidence and strengthen ongoing deployment endeavours. Whether conventional rooftop installation or otherwise, India must prioritise and accord due significance to its distributed PV industry.
The growing gap between electricity supply and demand, increasing electricity consumption, tariff hikes and legacy issues in the distribution network underscores the urgent need to promote grid-connected distributed PV systems more than ever. Moreover, the experience of global leaders in PV deployment shows that large-scale deployment of distributed PV systems will be crucial for India to have an impactful presence on the global solar landscape.
In the event of a successful transition to a rapid-growth phase, the distributed PV sector will embark on a journey of sustained development. On the other hand, if it faces setbacks, then prompt and appropriate policy intervention would be inevitable!
Pratik Joshi is a research scholar at the Ashank Desai Centre for Policy Studies, IIT Bombay. The author would like to sincerely thank Anand B Rao, Professor and Head of the Centre for Technology Alternatives for Rural Areas at IIT Bombay, for his valuable guidance in developing this article.
Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth
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