Solar rooftops : Hype or reality?

Ministry of New and Renewable Energy (MNRE) has set a target of 100GW on-grid solar power by 2022. Of this 40GW is expected to come from the rooftop and distributed solar power and the rest 60GW from large scale solar installations[1]. Although  India has made good progress in the installed solar capacity, rooftop solar still accounts only for 14% of the total solar capacity[2]. By 15th October 2019, only 1.8MW of solar rooftop capacity had been installed[3]. Solar rooftop is often advertised as being beneficial to the customer and even for distribution companies (DISCOM's), as it reduces distribution losses and the cost of procurement by the DISCOM's. (solar power is now competitive if not cheaper with most fossil fuel-based power). But is it as beneficial financially as is advertised? and why is the solar adoption rate in India so low? 

Integrating solar rooftops with the grid has several technical problems of grid compatibility and security.  Distribution companies are rightly worried about grid security, power quality and reverse power flows due to faulty inverter design in rooftop systems. These problems can be solved by the use of proper inverter with all these regulations built-in, but the distribution companies need to verify all of this before permitting a connection. This requires additional paperwork by the customer as well as by DISCOM's[4,5]. This paperwork can often be tedious, secondly from the perspective of a domestic customer, due to limited rooftop area the capacity that can be installed is limited and thus are the returns or bill savings. Also, solar installations require on-time installation costs and returns are usually spread over the next 5 to 10 years (these may vary depending on tariff and solar irradiation). These can further reduce the customer inclination towards solar-rooftop installations. 

Secondly, the returns of grid-connected solar rooftops are calculated mostly using one of the two metering schemes: 

1. Net Metering: The customer first uses the electricity generated by his solar panels and transfers the excess amount to the grid. Effectively there is a single meter, which moves in a positive direction when the customer consumes electricity from the grid and in the negative direction when the customer injects electricity into the grid. This continues till the end of the "settlement period" (usually the financial year). At the end of this period if a net negative reading is present then 
2. Gross Metering: There are two meters, the entire power generated is transferred to the grid and DISCOM pays the customer back at a pre-decided feed-in tariff (FiT)

Under net-metering in most states[5], the excess electricity is not billed as soon as it is injected but is carried over to the next month and subtracted from the consumption of that month and so on. Thus effectively the customer uses the grid as a battery bank for his excess power. Under gross metering, DISCOM's effectively buy the entire power generated at FiT which is often less than the average power procurement cost (the average price at which DISCOM's buy power from generating stations). However, under the net-metering scheme, the effective billed units of the customer are reduced (under gross metering since all electricity is injected into the grid, customer consumption remains the same). This means that the DISCOM is effectively buying the generated electricity at the rate at the average tariff rate of the customer. This rate would be much higher than the APPC of most DISCOM's (reaching Rs. 10/unit in some urban areas). Thus DISCOM's are buying electricity from distributed generators (rooftop solar) and even selling a lesser amount of electricity (since the consumption of customer is now lower), this can cause significant reduction in revenue (and profits) by DISCOM's if a large number of people install rooftop solar. This could be one reason (in addition to the technical difficulties highlighted above) why distribution companies do not push solar rooftop installations further.

The gross metering scheme can provide a financial incentive to DISCOM's for solar rooftops, but it significantly reduces the returns that a customer has (if the FiT is lesser than his average tariff, which it usually is).

For the above-mentioned reasons, India is falling behind the targets in Rooftop solar photovoltaics despite having a large potential in this area[2]. Solar rooftops, however, can be of benefit to DISCOM's in areas where theft is common. If any part of the power supply in these areas can be met by distributed sources, it would reduce the amount of electricity procured by DISCOM from generating stations (and if there was higher revenue loss from these areas due to theft). 

References:

[1] https://mnre.gov.in/solar/schemes/

[2]Vast Potential of Rooftop Solar in India (report), Vibhuti Garg, Energy Economist, IEEFA India Tim Buckley, Director Energy Finance Studies, IEEFA Australasia

[3]https://energy.economictimes.indiatimes.com/news/renewable/mnres-40-gw-rooftop-solar-target-unrealistic-parliamentary-panel/73132188

[4] Grid Integration of Distributed Solar Photovoltaics (PV) in India (report), Akhilesh Magal, Tobias Engelmeier and George Mathew, BRIDGE TO INDIA, Ashwin Gambhir and Shantanu Dixit, Prayas (Energy Group) Prof Anil Kulkarni and Prof B G Fernandes, National Centre for Photovoltaic Research and Education (NCPRE), Indian Institute of Technology (IIT), Bombay, Ranjit Deshmukh, Energy and Resources Group (ERG), University of California, Berkeley

[5] The exact regulations and permissions required can be read from RSPV regulations of respective states.

UP:http://www.uperc.org/App_File/UPERCRSPVDraftRegulations2019-pdf116201865502PM.pdf

Rajasthan: https://rerc.rajasthan.gov.in/rerc-user-files/regulations

Gujrat: https://www.gseb.com/DownloadFiles/File/GUVNL/Gujarat%20Solar%20Power%20Policy%202015.pdf