Cost of residential rooftop solar installations in India vs US

rooftop solar image by modernize

Gujarat, Haryana and Maharashtra are the three most attractive states in India for residential rooftop solar installations, a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics said.

The Indian residential rooftop solar segment is at the cusp of a robust growth phase. From 2 gigawatts (GW) cumulative installed capacity as of fiscal year (FY) 2022, the residential market will likely reach 3.2GW by FY2023, says the report’s co-author Vibhuti Garg, Director, South Asia, IEEFA.

In 2020, average cost of a residential rooftop solar system in India was $658 per kilowatt (kW), declining by 73 percent from the 2013 level. In comparison, in 2020, the residential rooftop solar cost in leading residential markets, such as Japan, the UK, Switzerland and the US, was 3.3x to 6.4x that of India.

India government’s recent push by launching a single national digital portal to simplify the process of residential rooftop solar installations and formalising a direct benefit transfer mechanism will boost capacity addition.

The new Central Financial Assistance (CFA) scheme will allow residential consumers to buy rooftop solar systems from any registered supplier of their choice, says co-author Prabhakar Sharma, Senior Research Associate, JMK Research.

Policy hurdles

State governments must resolve issues such as delays in net metering approvals and communication of the benefits of rooftop solar installations. Sometimes, state electricity distribution companies (DISCOMs) delay subsidy payments to the installers, disrupting the latter’s working capital flow.

All state electricity distribution companies must grant net metering approvals to the consumers within a strict and short timeline. In the case of residential rooftop solar systems, DISCOMs, in general, need to be restricted to carrying out two activities: inspecting solar plants and selling the net meters, says Akhil Thayillam, Senior Research Associate, JMK Research.