Is India’s rooftop solar push going into the sunset?

Is India’s rooftop solar push going into the sunset?

In today’s Finshots, we climb onto our rooftops to see why a grand 40-gigawatt solar dream has stalled at barely a quarter of that mark.

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The Story

When the government unveiled the PM Surya Ghar: Muft Bijli Yojana in February 2024, the promise sounded simple and irresistible: install a solar array on your terrace, receive a fat subsidy, and enjoy up to 300 free electricity units per month. 

But behind this headline lies a far bigger ambition to install 40 GW (gigawatt) worth of residential rooftop solar capacity across the country. This target wasn’t exactly new. It had already been missed in 2022, and a year later, the tally had crept only to 11 GW even as the country’s overall solar energy output raced past 80 GW. Our rooftops, as it turns out, were still sunbathing without harvesting much of it.

And this lag matters. Because the government’s master plan for 2030 calls for 280 GW of solar power. Out of this, about 40 GW is supposed to come from rooftop solar all around the country by 2027.

Now, rooftop panels aren’t just to provide homes with free electricity. They also ease stress on an aging power grid, reduce losses during the transmission of power over long distances, and provide a hedge when coal plants fumble during peak summer. This is exactly why rooftop solar deserves more attention.

Think about it. When your panels reach peak electricity output around noon, any extra power you don’t use flows directly into the local grid through something called net metering. That happens to be the same window when offices crank up their power loads. So every surplus unit pumped into the grid is one less unit the dispatcher has to transmit from a coal plant hundreds of kilometres away. Given that enough homes have solar panels installed, this capacity becomes a big deal. 

Sidenote: Contrary to popular belief, the solar panels on your roof will rarely power your home directly. Because most residential systems are grid-tied, any electricity you generate first flows into the grid through a net-metering setup. Your meter then nets off every unit you export from the units you consume, effectively shrinking your bill.

This is how local solar generation sidesteps two problems: it saves on long-distance transmission losses and frees up coal capacity for the evening ramp-up, when the sun’s down. A win-win situation.

Yet adequate rooftop solar power generation has been choked by three familiar culprits: patchy subsidies, wary discoms, and upfront costs.

Let’s talk about subsidies first. The Centre pays up to ₹78,000 of the system cost for smaller arrays (up to 3 KW), but only after you navigate the portal, apply through an empanelled vendor, and after they visit your house to inspect and approve it. This delay can shrink the subsidy’s appeal faster than most people think.

Distribution companies, meanwhile, are concerned about net-metering. When solar panels generate surplus power, they push it back into the grid, and households receive credits that reduce their bills. Good news for consumers, but bad news for discoms already struggling with debt. (We’ve written about this here.)

Up-front costs are the next roadblock. A normal three-kilowatt array still comes in at roughly ₹1.5 lakh. The Centre promises to refund up to ₹78,000, but for most people, the remaining amount becomes a hurdle. Banks and specialised NBFCs (non-banking financial companies) do offer collateral-free loans with subsidised rates, sometimes covering the entire project cost, yet most households have never heard of them.

And even if the money arrives on time, there’s another problem: installing solar panels requires the services of surveyors, structural engineers, certified electricians, and roofers who can complete the job properly. And this workforce is in short supply, especially outside metro cities. Recognising the gap, the Ministry of New and Renewable Energy has even launched a ₹2.3 crore start-up challenge about a week ago to fund new firms that solve this exact issue. This is a start, but until every district has a reliable installer and maintenance crew, many prospective buyers will worry about the after-sales service.

However, despite these roadblocks, rooftops still hold an economic trump card: India’s transmission backbone is creaking under record summer demand, projected to surpass 270 GW for the first time, and the grid is struggling to keep up. Nearly 20% of every unit sent across long distances disappears and never reaches our homes. If we generate that power on our own terrace, this loss is reduced. Scale it across a million homes, and we free up coal capacity for the evening peak.

So, can the Surya Ghar yojana rekindle the rooftop boom? 

Well, only if we solve a few problems… 

First, distribution companies must establish net-metering as the norm. Second, formal credit needs a marketing push. If households understand they can finance a solar system with ease, adoption will quickly trend upward. Third, skilled labour has to scale. A plumber who transitions into a solar installer after the last housing slowdown is precisely the kind of upskilling that can help them escape poverty; the sooner such talent pools deepen, the faster we can achieve the goal.

However, none of these dismiss utility-scale solar, which remains cheaper per watt thanks to large land banks and bulk procurement. But a centralised grid without rooftop buffers is like a highway without slip roads, where every car funnels through the same chokepoint at rush hour.

The bottom line is that if we fix the problems plaguing the  Surya Ghar yojana, rooftops could not only catch up but relieve the grid before the next record-breaking summer surge. The sun, after all, isn’t running out of energy anytime soon. The question is whether we can catch up and reap the rewards.

Until then…

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