Catching the sunshine

In 2024, India is betting big on rooftop solar. It started with the announcement of the PM Surya Ghar Muft Bijli Yojana, promising to deploy rooftop solar systems in 10 million homes. If successful, this scheme alone would result in 30 gigawatts (GW) of solar capacity being added in India. To put this in perspective, all of Africa deployed 25 GW of renewables over an entire decade (2011-2020). At the same time, rooftop solar has faced challenges in the past, so some analysts question whether India can aim for such a large target. What would it take for rooftop solar to become a success? And is PM Surya Ghar the catalyst that could change the game?

India already has the fourth-largest renewable energy capacity in the world. But this has to grow more than three times to reach the goal of 500 gigawatts (GW) of non-fossil power capacity by 2030. With an energy system of this scale, all technologies and business models would be needed. In line with such ambition, rooftop solar (RTS) could trigger a revolution in generation capacity, design of power markets and bring the energy transition closer to people.

India’s rooftop solar ambition began in 2015 with the announcement of a 40 GW capacity target. In the last decade, the programme has been revamped twice to provide the necessary thrust to rooftop solar adoption. The first phase, similar to grid-scale solar, succeeded in making rooftop solar an integral part of state renewable energy policies. The second phase, which began in 2019, created a supportive regulatory ecosystem and streamlined discom processes and metering infrastructure. These policies notwithstanding, India managed to deploy only 3 GW in the residential sector and overall 11.08 GW of rooftop solar systems.

Now, with the PM Surya Ghar scheme, India once again has raised the ambition for residential rooftops to ensure that people are the drivers of and benefit from the energy transition. According to an analysis by the Council on Energy, Environment and Water (CEEW), over 25 crore households across India have the economic potential to deploy more than 100 GW of solar energy capacity on rooftops.

Benefits of scaling up rooftop solar

Rooftop solar has the power to address many of the issues plaguing our power sector and the rising demand for energy to keep homes and the economy powered.

It can support shifting the rapidly rising electricity demand in the residential sector to clean energy. Indian households, with a cumulative consumption of 360 billion units, contribute about 25 per cent of the total power consumption. According to the International Energy Agency, electricity demand in the residential sector is likely to grow three-fold by 2040. Rapid urbanisation, together with increased appliance ownership and demand for cooling, will fuel this growth. Electric vehicles will further add to the demand for electricity from households.

Power distribution companies (discoms) worry that rooftop solar would result in lower revenue for them — but in the residential sector, the reality can turn out to be the opposite. Rooftop solar can support discoms in addressing the legacy issue of cross-subsidy and emerging challenges due to rising demand. In India, 95 per cent of households consume less than 300 units a month. This makes them eligible for electricity subsidy, making discoms lose money on almost every unit that they supply. This is one of the primary reasons for the poor financial health of discoms. The scenario changes the moment households become ‘prosumers’ (producers and consumers of their own electricity) with rooftop solar. As per CEEW analysis, discoms would save about INR 2.7 lakh crore worth of cross-subsidy over 25 years if India achieves the 30 GW target. Similarly, in the absence of rooftop solar, discoms will require significant investment to upgrade their infrastructure to keep pace with demand growth and access to reliable supply. Such financial gains will also compensate discoms for infrastructure for increased rooftop share in the grid.

Finally, rooftop solar can bring the energy transition closer to communities and provide employment to lakhs. While India has electrified at a record pace, it still needs to ensure quality energy access at all times. Currently, solar deployment is skewed towards grid-scale solar and is concentrated in only six-seven renewable energy-rich states such as Rajasthan, Gujarat, and Karnataka. Rooftop solar, however, can be deployed across most states. Their installation will also help states create seven times more jobs compared to the grid-solar sector. Moreover, it offers an economic alternative to provide reliable power in remote areas and sparsely populated geographies. The Himalayan and northeastern states see rooftop solar as a viable alternative to offer reliable power.

The challenges to achieving scale

Despite several benefits for households, the power system, and more equitable regional economic development — in addition to contributing to India’s climate commitments — the rooftop solar sector requires a perfect symphony of tailored interventions to make it work in India. It will need far better consumer awareness, demand-side incentives, and robust regulatory ecosystems.

First, India needs to raise consumer awareness about rooftop solar. The absence of an easily accessible and trusted source of information, that too in vernacular language, often leads to misinformation and myths among consumers. This makes solar less desirable, even with generous capital subsidies and a supportive ecosystem. For instance, Gujarat, with the highest consumer willingness towards rooftop solar at 12 per cent, also tops the deployment chart with a 25 per cent share. By contrast, consumer willingness in other states hovers between 2 and 5 per cent. States can leverage Artificial Intelligence-based generative models, similar to chatbots, or apps to provide reliable information on solar technology, subsidy, total cost and metering processes. It should also include information about credible solar vendors, maintenance of the system, and solar loans.

Secondly, while the RTS potential exists across states, realising it will require a significant push on demand creation and aggregation. Fit-for-purpose schemes and business models such as solar villages, solar cities, solar compacts, and community solar could help unlock untapped demand and also accelerate deployment. Demand aggregation shall be supported with a robust local ecosystem of solar vendors, financial institutions offering loans, and trained discom staff for expedited solar applications from households.

Finally, states need to promote an enabling regulatory ecosystem. Restrictive regulatory provisions, such as on RTS plant capacity, distribution transformer capacity, metering and billing, often constrain the demand for rooftop solar as they directly impact the overall technical and economic viability of the solar system. Further, state regulations must adopt newer metering regimes, such as virtual and group metering, which offer better incentives to consumers and facilitate new business models that address barriers such as access to capital and roof space.

Rooftop solar in India isn't just about meeting energy targets — it's about democratising power. With the PM Surya Ghar scheme, India asserts its commitment to empowering households and communities in the clean energy revolution. But ambition alone won't suffice. Realising the massive potential requires more than just setting targets; it necessitates a comprehensive strategy encompassing awareness, demand creation, and regulatory reform. Only then, rooftop solar can be the cornerstone of a sustainable, inclusive energy future for India.

Arunabha Ghosh is CEO and Neeraj Kuldeep is Senior Programme Lead at the Council on Energy, Environment and Water (CEEW). Views expressed are personal