In a remarkable push towards renewable energy adoption in homes, the central government has recently announced PM Surya Ghar: Muft Bijli Yojana, aimed at installing 1 crore solar rooftops across the country. On the backdrop of the economies marching towards being net-zero, there is a need now to discuss the opportunities and challenges within this new initiative.
The government’s primary objective is to provide free solar electricity (up to the subsidy limit) to economically disadvantaged individuals consuming less than 200-300 units monthly, achievable with 1-2 kW installations. However, applications on the National Portal for systems averaging around 4 kW exceed this capacity, indicating that most of the benefits are going to people living in much larger homes. Serving the 1-2 kW segment is complex due to limited terrace space, uneven terrain, shading, and low property ownership among economically disadvantaged customers. Additionally, there is a risk of vandalism, theft, or resale of panels after receiving subsidies in these areas.
To effectively cater to customers consuming less than 200-250 units monthly, promoting community solar projects (Virtual Net Metering Policy) is a must. In Community Solar, a central remote solar power plant is set up, and the energy generated is credited to consumers who live elsewhere in a mechanism called “Virtual Net Metering”. Typically these central solar plants can generate solar electricity at approximately half the cost of a solar rooftop system and thus also end up achieving significant benefit. Essentially the capital subsidy that the government plans to spend on rooftop solar, of approximately 75,000 Crores can result in 2X solar energy generation and use.
Community solar offers a viable solution for benefiting from solar subsidies and cheaper energy costs for those that will not be able to implement solar rooftop systems – mainly the urban poor and also rural customers. In certain US states, a percentage of capacity must be reserved for economically disadvantaged segments. For example, a community solar park might need to allocate 25% of its capacity to customers who have used less than 300 units of power in the past three months. Implementing 3-5 MW community solar parks can reduce the Levelized Cost of Energy (LCOE) by over 50% compared to 1 kW systems, benefiting this economic strata.
In community solar initiatives, safeguarding DISCOMs’ interests by offering them a share of energy charges, typically 15-20%, is crucial. For instance, if a community solar plant generates 1000 kWh monthly, DISCOMs may allocate 80-85% to customer accounts and retain the rest as charges. Additional costs such as wheeling and third-party charges should be eliminated. DISCOMs often face losses when servicing customers consuming 100-300 kWh per month and rural residential customers, and this program can help mitigate financial challenges. The low LCOE of solar power (~3 Rs/kWh) presents a significant opportunity to benefit those in need. By adding capital subsidies to solar initiatives, we can ensure these advantages reach economically disadvantaged groups rather than higher-consuming rich households. In summary, Community Solar (Virtual Net Metering) needs serious assessment and development as a solution to issues in applying the PM Muft Bijli Yojana to the intended customer segment.
Net Metering in its current form is unsustainable and poses challenges for DISCOMs that are already burdened with substantial losses. As the residential solar rooftop program expands, much daytime solar energy remains unutilized by consumers and flows back into the grid. This creates issues similar to the “duck curve” observed in regions like California, where surplus solar generation occurs during daytime hours. In India, this issue is expected to be more pronounced due to lower daytime electricity demand compared to industrialized countries like the US. Net metering exacerbates the financial strain on DISCOMs, effectively making them unpaid storage facilities for homeowners who generate solar energy during the day and draw energy from the grid at other times. Western countries, having learned from their experiences, have scaled back net metering benefits to enhance program sustainability, as seen in the recent NEM 3.0 adjustments in the US.
The key to sustainable solar power is storage, a realization prompting markets to adjust. India must shift its policy and immediately mandate storage with every rooftop solar installation to enhance sustainability, rather than burdening DISCOMs with net metering. Establishing a suitable framework facilitates virtual power plants using aggregated storage fleets during peak hours. For instance, each rooftop solar plant could be required to integrate three hours of storage capacity for consumption between 6-9 PM. This would significantly bolster the energy system. The cost of storage has declined substantially, with countries like Germany, US, and Australia incorporating storage in rooftop solar systems. The electric vehicle revolution further reduces storage costs through economies of scale. Of the planned ₹75,000 Crores capital subsidy for rooftop solar deployment, at least 50% should be allocated to storage. Subsidies should exclusively support rooftop systems equipped with storage. Failing to implement these measures promptly risks inevitable issues with the expansion of rooftop solar installations. India can leverage the experiences of countries like Germany, US, and Australia, which have developed solar rooftop policies over the past decade, to avoid repeating their mistakes.
The primary concern for the rooftop solar program is the lack of emphasis on safety and quality. With over 10,000 solar installers, a number expected to grow to 1-2 lakh, India lacks clear safety guidelines, leading to potential injuries and fatalities. Rooftop solar systems often cover the entire terrace area and extend to the edge of parapet walls, posing dangers during installation and subsequent operation and maintenance over the system’s 30-35 year lifespan. Strict guidelines are essential to address these risks, including a mandated one-meter perimeter around rooftop solar systems for accessibility, and prohibiting installations from reaching the terrace edge. Providers may prioritize profit by maximizing panel installations, but this approach carries substantial safety implications. Establishing stringent safety codes for building rooftop solar systems is essential.
Quality is critical, as customers may feel deceived if promised outcomes aren’t delivered. It is very easy to cut corners and deliver poor quality in a solar system and currently there is absolutely no check on quality. IEC certification of a module is absolutely no way to ensure a good system has been installed’? With the novelty of this asset class, consumers struggle to discern quality amid competing claims.
Quality spans materials (e.g., UV-rated cable insulation), construction (e.g., no site welding to prevent corrosion, using galvanized steel or aluminum with bolts), O&M (e.g., monitoring systems with alerts and guidelines), material reliability, design (e.g., structures designed for wind loads), and energy performance. Some providers maintain high standards, but monitoring thousands of systems is challenging. To mitigate this, MNRE’s capital subsidies should mandate rigorous energy generation. Every system installed with MNRE subsidy must be monitored and the energy generation data, must be uploaded in a central server, with certain dashboards of performance on every provider being publicly available. If we don’t do this, hundreds of thousands of systems will be installed that simply will not perform in a few years and there will be a public uproar. Subsidies should only be disbursed upon meeting performance criteria, with aggregated data accessible to inform provider selection.
Ultimately, ensuring energy performance and service quality is paramount, especially considering the government’s substantial investment (20-40% of capital costs). Mandating stringent quality and performance standards is imperative to safeguard consumers from potential exploitation in the burgeoning rooftop solar market. The technology to do this exists, but we need to see if the will is there.
Pradhan Mantri Suryodaya Yojana’s Vision for Solar Empowerment in India
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