Updated: Mar 4
The most economic way of generating electricity for a company or individual is by installing solar rooftop plants on their rooftop. The large upfront cost seems to be the only barrier which is making it difficult for individuals to adopt this cheapest source of energy.
The global COVID-19 crisis has helped the industries and the commercial establishments over the world understand that installing rooftop solar is one of the most easy, economical and proven method of cutting down on operational costs.
It is estimated that the solar rooftop industry would grow due to this realised need of rooftop plants in industries. It would be a key factor powering business expansion in 2021. The increased demand of rooftop solar will open doors to various other services associated with it like installation service, imports, manufacturing in India, maintenance, etc. This will also improve the profitability as a whole for solar companies. Due the pandemic in 2020, most customers postponed their plan of going solar that year, but we expect that now only large industries but SME sector would also be eager to adopt rooftop solar this year and reduce on their operational cost heads.
The larger corporations, having surplus funds in reserves and a huge electric bills, are the ones adopting rooftop solar at a fast pace and at extremely low costs. SME’s understandable having their cashflow take a hit in 2020, are now starting to again drive a demand in the industry. Government subsidy, lack of awareness, no access to easy finance options in the markets are a few of the vital points which is hampering the growth of solar in residential sector. Where as there are specific engineers who look at the rooftop solar plant in detail comparing costs, residential customers fall into the claws of vendors who quote the lowest price and make the journey of installing solar not pleasant.
Though the positive news is, the number of queries we receive currently are exceeding the pre-COVID levels !
One of the most effective method to encourage everyone to go solar in 2021 is making available funds easily and cheaply to people who are willing to go solar. Providing subsidy on solar pv plants is not a effective way as it requires the customer to opt for the most lowest quality system available in the market, which damages the solar experience for him and his near ones. Though there are schemes introduced by the government in nationalised banks targeted towards individuals opting solar energy, the scale of implementation of these schemes should be checked. If done properly, a new method of installing solar in RESCO model might be the most effective way of pushing residential customers to adopt solar at a much faster scale.
Financing is easily available to A-rated corporate houses through various international organisations like World Bank, Asian Development Bank, and the Green Climate Fund but the MSME sector lacks this support. Small Industries Development Bank of India (SIDB) has tried to introduce a easy financing for this sector but a lot of development needs to be done and 2021 may not see this happening.
Currently, one of the most important factor which is hindering the growth of this industry is the rise in the cost of solar panels. Shortage of material from China and surrounding countries is driving this price hike. With the vaccination drive in progress and underway over the world, it is expected that the price rise would start to subdue a little after the month of July 2021.
Though if the safeguard duty (SGD) imposed by India on imports of solar panels is extended, the recent price hike may not go anywhere anytime soon. In this, intention of the government may it be a positive way to strike growth in the Solar Manufacturing industry. But it is a very dangerous path to trend on, specially if we are not able to match the production rate and the price of solar modules and cells offered by the competitor countries like China.
Lack of clarity from Government
Rooftop solar sector is always under the contrasting views put forwards by the government and on ground realities or the governments actions. There is a target of 40GW by 2022 put forward on one side, while the current capacity and rate of work is no where near to this number. A simple look at the present numbers and the targets set by the government can show how much disparity there is.
One one side such targets are set, on another side news of net metering being capped at 10kW per customer is being floated which might be rooftop solar industry killer. The government needs to streamline its vision and the on ground progress and provide support to match them both. Instead of capping the solar capacity per customer, the government can easily cap the net-export reading per customer. This way the DISCOM can reduce its losses while not hampering the customers negatively with their choice of installing solar.
Both ways, solar industry in 2021 is going to change on a larger scale. Vendors who used to undercut margins, provide at lower rate with sub-grade materials would not withstand the quality game currently introduced in India by major players. Increasing awareness in the MSME customers will cause them to make informed decisions on quality and price from now on ahead. Number of increasing clients would make the standing solar companies be more profitable reducing their low line expenses majorly.