Highlights of our study
- By 2020, India is planning to upgrade the solar power generation to 100 GW, which is among the largest in the world.
- By financial year 2017, The World Bank (WBG) is helping India on the plan by providing a fund of more than $1 billion. This is largest-ever funding for solar power to any country.
- WBG is also aiding India-International Solar Alliance, which targets to promote usage of solar power globally by investing $1 trillion by 2030.
“The world must turn to (the) sun to power our future,” India’s Prime Minister Narendra Modi said at the historic COP21 climate conference in Paris last year. “As the developing world lifts billions of people into prosperity, our hope for a sustainable planet rests on a bold, global initiative.”
The Indian realty sector is going through massive changes and builder lingo is introducing projects which are more of like smart houses. Environmental hazards are the major problems in the major cities like Delhi/NCR, Chennai, Kolkata, Bangalore, and Mumbai, which is leading to the hazardous health issues. Due to wide and enhanced range job opportunities, the real estate of Kolkata, Mumbai, Delhi, Chennai and other tier 1 cities is flourishing. To overcome this issue, government has introduced the concept of usage of solar energy.
According to reports, “India is having fourth largest electricity generation capacity in the world after US, China and Russia. Its Renewable Energy (RE) share increased to 13.16% in 2015 with solar energy having a share of 11.62% in it. Between 2005 and 2015 the renewable grid connectivity has increased from 6.2 GW to around 36 GW for both solar and wind. As on June 2016 renewable based capacity became 43,727 MW in the total installed capacity of 303,100 MW”
The Indian realty market is observing a trend wherein solar rooftops are being accepted by major builders across the country for the projects. With over 300 million houses in India, over 300 days of sunshine in year, the government has targeted of 100 gigawatts of rooftop solar by 2020. Various states are formulating rooftop solar policies which are expected to bring revolution in Indian homes.
India is the world’s fastest growing solar markets and impressive progress has been made to achieve the goal.
The primary reason for the growing popularity of solar rooftops in real estate project can be divided into two categories:
- Environmental and building norms
The government is keen to diminish the dependency on fossil fuels due to the adverse effect on the environment. Hence, as per the environmental regulations, the solar panel is mandatory on the rooftops for lightening and other heating requirements.
Due to the increasing popularity of solar rooftops, the cost has come down drastically. Solar is a good option for power back-up for the localities who want to reduce the electricity bills. The cost of the solar panels depends upon the size of the panels, which ranges from Rs 15,000 onwards, depending upon the capacity.
What and Why Solar Panels?
Solar energy is considered as a prominent and powerful source of eco-friendly energy. The energy is collected into panels, which later converts light into electricity and meet the needs of the power. Solar Panel is cost-effective and requires less maintenance.
Installation of Solar Rooftops
In today’s scenario, the solar developers are prefer commercial buildings over residential space due to a number of reasons. The primary reason is lack of space, for e.g. a 10 KW solar plant can power three air-conditioners and more than sufficient for a three BHK residential apartment which is sprawled in an area of around 1200 sq. ft. But at most of the places, getting a standardized open roof space is a big challenge. Most of the residents are not willing to block the rooftops, as they use it for several other purposes such as gardening, installing water tanks, etc. The solar rooftops can be installed on the raised frames, to support this, Delhi government has tried to promote group housing offices and commercial space to tackle the lack of space.
“In the residential sector, the large rooftops are the low hanging fruits. While there is a lot of potential, it needs a long-term clarity on how the electricity generated will be sent to the grid and how the home buyers will get the incentives,” Arunabha Ghosh, chief executive of Delhi-based think tank Council on Energy, Environment and Water.
Benefits of Solar Rooftops
The most consequential advantage of solar rooftops is reduced energy bills. The profit level depends hugely on the amount of energy produced in the given environmental conditions. Hence, the geographical location plays an important role to maximize the benefit of solar power. Solar rooftops have become a lot cheaper with improved quality of phot-voltaic cell. Several developed countries possess an aggressive sustainable strategy for generating the power by the renewable energies including turbine energy, solar energy and more. Hence, the demand has risen globally and the cost has reduced in last five years.
- Rise in Property Value
Due to the installation of solar rooftops, there is an escalation in property value. The reasons are, low energy bills, green living and smaller carbon footprints. The properties where solar rooftops are already installed are more in demand.
At present, the solar power generation companies are supplying power to the grid by the help of DISCOM. In order to encourage the usage of solar rooftops in smaller areas, the government is providing viability gap funding or subsidy for the society owners or to the developers who are into installing this. Therefore, the authorities are providing incentives to the developers such as single window clearance system or FSI for whose projects confirm to revised norms that include the usage of solar panels. Solar rooftops has experienced a stable growth in recent years, it offers lower electricity consumption (on an average 30% savings in business and 18% for the industry). However, the market is mounting with 300% speed.
- Third-party Financing
The third-party financing model includes rooftop solar developers and customers. The developer installs the solar plant on customer’s property and the third party invests in it. For next 15-20 years, the customer agrees to purchase electricity at a specified rate without any upfront cost. The World Bank has sanctioned an amount of $625 million loan that will support the Indian Government for Grid Connected Rooftop Solar Program by financing the installation of Solar Panels on rooftops across India. The project has also received funds from Banks as well as Clean Technology Fund of Climate Investment Funds (CIF). The International Finance Corporation (IFC) has supported in settling up the 740 MW ultra-mega solar power project in Rewa, Madhya Pradesh. This will be one of the largest single-site solar power project of world. IFC will also help in structuring and implementing the transaction to attract an investment of around $740 million.
In coming time, India is planning to develop one of the biggest solar parks of the world. It will be located in Karnataka and expected to generate around 2 GW of electricity that is sufficient enough to power approx. 1 million households. The solar energy will help to reduce carbon di-oxide emission by 20 million tons a year and will save around 3.6 million tons of natural gas which is used to generate electricity.
Current Scenario in India
Today, India is one of the lowest per capita consumer of electricity in the world and still nearly 300 million of people are living without electricity. Adding to that, the projected economic growth and the increase in population and the demand for electricity is expected to be doubled by 2040.
Some of the typical states as listed by CERC: (1) Maharashtra grid 19,804 MW (250 MW power drop limit), (2) Gujarat grid 13,499 MW (250 MW power drop limit), (3) Tamil Nadu grid 13,498 MW (250 MW power drop limit), (4) Uttar Pradesh grid 13,003 MW (250 MW power drop limit), (5) Rajasthan grid 10,642 MW (250 MW power drop limit ), (6) Punjab grid 10,023 MW (200 MW power drop limit). The figures in brackets are statutory limits of disappearance/drop of power supply to the state grid, else the grid frequency will take huge hit, and grid management by state and regional load dispatch centers will become unmanageable.
“India’s plans to virtually triple the share of renewable energy by 2030 will both transform the country’s energy supply and have far-reaching global implications in the fight against climate change,” said Kim. “Prime Minister Modi’s personal commitment toward renewable energy, particularly solar, is the driving force behind these investments. The World Bank Group will do all it can to help India meet its ambitious targets, especially around scaling up solar energy.”
Indian Government has bagged $1.5 billion of foreign financial aid for the installing solar rooftops. The Indian government is planning to utilize this fund to provide a 30% subsidy to set up the rooftop solar plants for domestic and commercial users. They have also announced several to popularize the usage of solar rooftops, below are the top mentioned incentives,
Capital Subsidies: 30% subsidy is provided to residential, social and institutional sectors for the general category and 70% of the benchmark for the special segments i.e. North Eastern states which includes Himachal Pradesh, Sikkim, Jammu & Kashmir, Andaman Nicobar and Lakshadeep.
Tax Benefit: It provides direct and indirect tax exemptions, such as the excise duty exemption, the custom duty exemption.
Renewable Energy Certificate (RECs): The solar rooftops are eligible for issuance of renewable energy certificate which is specified by the Central Electricity Regulatory Commission.
Non Metering Incentives: The generated electricity can be used for the self-consumption also by net metering approach. It is a mechanism which allows two way-way flow of current, where the user has to pay only for the net electricity supplied by the DISCOM.
In addition to that, banks are hesitating to provide loans for the installation of solar rooftops due to limited information on the track records of the this investment. Even when the banks lend the money, the high-risk perception has led to the high cost of borrowing for the installation process that has negatively impacted the IRR of the whole project.
According to Arjun Shrihari, co-founder of 8Minutes, told thethirdpole.net “It [rooftop solar] is very doable. Often, solar developers go for big-ticket projects in the commercial sector but this is where we are trying to fill the gap. Often, we find that people who have spaces don’t have the money, while those who have the money don’t have adequate space. So, we try to find solutions to help them go solar. Also, we have seen the cost of power drop by 90% through rooftop solar installed in homes. And this is a huge saving on power bills”
Currently, Gujarat ranks on top in solar power generation with a commissioned capacity of 929 MW followed by Rajasthan. Going forward, solar panels are turning into an essential part of smart homes and the builders are incorporating it in every project. The solar rooftops offers healthier and eco-friendly living place for the residents. According to reports, in coming 2 years, the cost of solar power generation will be similar to the energy produced by fossil fuels such as gas, coal and oil. The rapid diffusion of solar power will lead to improve in quality living standard especially for the poor citizens. Along with that it will also create lakhs of jobs in solar industry by fulfilling the dream of becoming the India of the future. Solar rooftops are still relatively a new technology in India and hence the perception may not be as expected. There are also some risk factors associated with the customer and the payment. The industry players are suggesting to involve DISCOM as a power purchase agreement between the customer and the supplier in order to reduce the customer risk credit.
By 2030, India is planning to triple the share of renewable energy which will transform the country’s energy supply and will have far-reaching global implications against environmental odds.