Here is how demand aggregation can improve rooftop solar installation in India

India achieved 8.07 gigawatts of rooftop solar (RTS) installations by December 2022, out of the 40 GW of the target the Centre had set. The low deployment can be due to several reasons, such as the absence of financial access, lack of interest by distribution utilities and lack of performance guarantees. 

Challenges for the Rooftop solar programme

Source: ADB Solar Rooftop Report 2022

This makes it necessary to recognise business models for their increased deployment and identify suitable capitalist ventures for adopting rooftop solar.

The Government of India aims to achieve 500 GW of renewable energy deployment by 2030. The Forum of Regulators had approved the business models for power distribution companies in their report Metering Regulations and Accounting Framework for Grid Connected Rooftop Solar PV in India, which are as follows:

1. Consumer-owned (utility-only aggregates): In this model, the distribution utility plays the aggregator role by facilitating the installation of RTS for the end-user. Once the demand has been aggregated, the distribution utility starts reverse bidding to deliver engineering, procurement and construction (EPC) services for the demand aggregated. The end-user must finance the capital expenses.
2. Consumer-owned (utility aggregates and acts as EPC player): In this model, the end-user and the distribution utility sign an EPC agreement to install RTS. The distribution utility signs another contract with the EPC player, who is selected based on reverse bidding. The distribution utility gets returns based on a one-time facilitation fee and an allowance on successive EPC contracts.
3. Third party-owned (utility aggregates and acts as an agent between renewable energy service company (RESCO) and the end-user): In this model, the distribution utility aggregates the demand in the distribution area, and through reverse bidding, the RESCO is selected. Financing is done through the distribution utility and the distribution utility signs a power purchase agreement (PPA) with the RESCO and the end-user. The distribution utility charges trading amounts for easing trading alternatives.
4. Utility-owned (distribution utility aggregates and works as RESCO): The distribution utility installs, owns and operates the rooftop solar projects in this model. PPA is signed between the distribution utility and the end-users, and the EPC agreements are finalised between the distribution utility and the EPC organisations.

The distribution utilities can work towards demand aggregation and improve the deployment of the RTS through a systematic approach. The demand aggregation mechanism can be classified into the following types: i) Aggregating demand from the end-users, ii) Suitability analysis and iii) Execution of Rooftop solar programmes

Classification of demand aggregation mechanism 

State-wise RTS projects

States have taken up measures to promote rooftop solar such as production-linked incentives, additional subsidies, net metering regulations and demand aggregation for the combined deployment of RTS. By December 2022, Gujarat had the maximum RTS installation capacity of 2,206 megawatts, followed by Maharashtra with 1,385 MW, Rajasthan with 835 MW, Haryana with 418 MW and Karnataka with 400 MW. 

Some of the policy measures taken by states towards the deployment of rooftop solar have been mentioned below:

1. Delhi Solar Policy 2016 and Mukhya Mantri Solar power Yojana for Domestic
(Residential) Sector Consumers in NCT of Delhi:

• The Delhi government provided a generation-based incentive (GBI) of Rs 2 per unit for the solar power produced between FY 2017 and FY 2019. This GBI has been extended for five years from FY 2020
• The Energy Efficiency and Renewable Energy Management Centre executed the project through Indraprastha Power Generation Company Ltd (IPGCL)
• The project was relevant to the domestic sector's current and subsequent net meter connections
• The minimum requirement for GBI was 1,100 kilowatt-hours solar units produced per annum per kWp to 1,500 kWh per annum per kWp

In 2018 and 2019, IPGCL undertook demand aggregation for rooftop solar from government buildings, residential users and residential societies.

2. Amendment to Goa State Solar Policy

The Government of Goa released an amendment to its state solar policy of 2017 on February 7, 2019 and appointed Goa Energy Development Agency (GEDA) as the state nodal agency. 

The amendment includes a subsidy of 50 per cent (40 per cent by the Centrel and 10 per cent by the state for 1-3 kWp of RTS) of the capital or the benchmark by the Union Ministry of New and Renewable Energy (MNRE) or tariff derived from the tender method by GEDA, whichever is less. The state subsidy would be released after six months of the solar injected into the grid.

For demand aggregation, the distribution utility can work in the facilitator or investment roles for the rooftop solar photovoltaic system. As a facilitator of rooftop solar projects, the distribution utility aggregates the demand from the end user. It works to engage developers for the installation of the RTS on the selected end-user roof. 

Utility-led demand aggregation model

Source: ADB Solar rooftop report 2022

MNRE launched Phase-II guidelines for improving the grid-connected RTS installation in 2019 with central financial assistance  of Rs 118.14 billion.

The first demand aggregation programme in the country for RTS was started by the Government of Gujarat in Gandhinagar, with support from the International Finance Corporation in public private partnership (PPP) mode in 2010. 

Of the 5 MW aggregated power, 80 per cent was allocated to predetermined government blocks and the rest to the private blocks by developers. Gujarat Power Corporation Limited was the programme implementer and, in the first stage, identified the private rooftop solar consumers who had registered for the programme and collected the requisite information. 

The developer chosen for the programme analysed the details, and based on their technical and legal feasibility details, the prospective private consumers were identified.

The RTS programme was based on a build-own-operate model, and the power produced was sold to the utility. Rs 11.21 per kWh was the lowest price uncovered for the 2.5 MW project. 

Similar to the Gandhinagar programme, five other cities in Gujarat implemented RTS with 25 MW aggregated capacity. Madhya Pradesh and Odisha governments also implemented RTS under the PPP model with 5 MW and 4 MW aggregated capacity, respectively. Subsequently, many RTS programmes have been implemented across the country.

Tariff by the bidders for the 2.5 MW RTS

Source: ESMAP Gujarat Solar Rooftop report

Rooftop solar provides several utility benefits such as low technical and commercial loss as well as improved demand-side management. Several distribution utilities across the country, recognising such advantages, have declared projects in which they actively participate as rooftop solar demand aggregators. Through this role, the capital and transaction tariffs can be lowered. 

The main challenges to the RTS deployment have been low end-user awareness and the increased consumer acquisition price for the project developers. These issues can be resolved through demand aggregation.

As the solar industry develops, RTS is anticipated to build up as it eliminates the requirement of large land and lowers the load on the distribution side due to localised production and utilisation.

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