Monday, March 31, 2014

Rooftop Solar – a revolution just about to start in India?

This is a special industry story written by Narasimhan Santhanam. 

I had the opportunity to visit one of the largest (single location) rooftop solar installations in the world a few months back.

That was in New Jersey, where a logistics company (Holt Logistics) had installed a 9 MW solar power plant on its massive warehouse not from the New Jersey port.

To me, that day was a revelation.

Until then, I had, like many others in the Indian solar power sector, assumed that rooftop solar would take time to grow, at least installations beyond 10 kW. The reasoning was that most companies would rather wait until the prices came down further, the grid prices went higher, and until the policies became more clear. Until then, the thinking went, most companies would only consider rooftop solar a toy and conduct small experiments and pilots.

The 9 MW Holt Logistics rooftop solar plant, as well as what I am seeing in India since then, made me start rethinking about the pace at which rooftop solar installations would happen in India.

And it appears that things indeed could be changing for rooftop solar on the ground in India.
Recently, I heard from the CEO of Solarsis (a Hyderabad based solar solutions provider) how they are implementing a 1 MW rooftop solar system at IIT Madras. Recently, EAI assisted a large American company in finalizing a 700 kW rooftop solar system for their upcoming factory near Madurai. And you would have doubtless heard about many 100+ kW installations all around the country.

EAI alone is currently assisting more than half a dozen industrial clients in various stages of rooftop solar implementation, and most of these are 50+ kW in capacity.

All these kind of convince me that the rooftop solar growth is reaching an inflection point.
There are of course skeptics and their skepticism is indeed justified. I and my team have seen how many companies have been dragging their feet on rooftop solar decisions for months. We are all witness to how MNRE’s “capital-subsidy-that-never-was” policy has delayed many decisions even among well-meaning industrialists. Last but not the least, the market today operates with few established standards and benchmarks, leading to less-than-honorable companies spoiling the pitch for themselves as well as for the rest of the industry.

All the above are happening, and can be expected to continue for some time.

But these should not distract us from a trend, which is my opinion, is as clear as it can get in business, and that trend is: Rooftop solar will grow very fast indeed for the next many years in India.

Why am I so confident while some others are not? What will be the drivers that will offset the spoilers mentioned above and ensure high growth? Here are some thoughts.

Rooftop Solar Guide
By the way, EAI has come out with a comprehensive guide for rooftop solar installations.
You can download the draft guide from here. Advertising avenues available for vendors.


This is a story & business case most of you know about, so I will keep it short.
In most industrial and commercial settings, the cost of solar power has reached parity with average price paid for grid power. And the cost advantage will only get better for solar with time. In places where diesel has to be used for backup power in a significant way, the solar story only gets better and stronger.
Source Credit: Econserve
Land Availability
In most cases, industrial and commercial rooftops are not being used for anything at all. It thus becomes an easy decision to make for the management, to utilize it for something productive (this was one of the drivers for Holt Logistics). This is especially true of warehouses and other such places with massive rooftops which can hardly be used for anything else.

(The Holt Logistics solar array on its warehouse, courtesy: Holt Logistics)

Green Thinking
It is undeniable that at least a percentage (even though this could just 5%) of the management in companies are keen on showing to the rest of the world that they are green, and in a meaningful manner. This could be further enhanced in India owing to the recent mandates on CSR.
Sustainability, sustainable living and sustainable corporates are not fads. Most industry leaders agree that these are unstoppable forces that will only get stronger in future.
Below you see Daimler India’s rooftop solar plant above their warehouse in Chennai

PPA Model

Undeniably, one of the biggest stumbling blocks to rooftop solar is the high upfront cost (currently around Rs 1 lac per kW without subsidy). But the PPA model or leasing model essentially overcomes this challenge.
Under the PPA model, the rooftop owner need not pay any upfront cost; rather, he pays per unit of electricity he consumes from the rooftop solar system – quite the same as what he does to the state or private utility today.
Source: Empower Me
The Critical Mass Effect
Like any other new idea, solar too goes through the Innovators – Early Adopters – Early Majority – Late Majority – Laggards (see Technology Adoption Lifecycle).

Source: (Wikipedia)
The question of course is: Where exactly is the rooftop solar adoption in India? Is it at extreme left? Or had it reached Early Adopters stage? The more important question is, if it is the former (more likely), then how long would it take to reach the Early Adopters stage?
The above are questions that those in the Indian rooftop solar segment should ask themselves.
In my opinion, we are not far from hitting the Early Adopter stage. Which means that hyper-growth is not far away.
And in my opinion hence, it is time for companies in the Indian rooftop solar sector to tie their seat belts for take-off.

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