Discoms are the principal stumbling block in India realising its rooftop solar power goals
There is no better way to illustrate how much out of kilter things are in India’s rooftop solar programme than to juxtapose two figures. Against a target of 10,000 MW to be achieved by March 31, 2018, the country had 845 MW installed as of end-October this year. A failure of this order cannot but rankle and the Government has put out a ‘concept note’ for public comments, which outlines the Centre’s thinking on how to fix things. The note recognises that the biggest hurdle to mass roll-out of rooftop solar plants is the electricity distribution companies (discoms), most of which are State government-owned. These discoms have provided languid support to rooftop projects because of their instinct of self-preservation. The discoms stare at instant financial turmoil if well-paying industrial and commercial customers get their own sources of energy. As such, these companies have effectively derailed their customers’ rooftop ambitions by refusing to buy any surplus power from them. Therefore, factories and commercial establishments, like shopping malls, put up only as much rooftop solar capacity as would satisfy their demand, even if they have the space and wherewithal for more. As for individuals, rooftop solar has never been an attractive proposition even if they got the subsidy given by the Central and State governments. Recognising the need to bring discoms on board, the concept note aims to put them in the driver’s seat, by giving the discoms financial incentives for every MW of rooftop capacity created in their area of operation. However, to avail themselves of incentives, discoms should create the capacities through tariff-based competitive bidding. This, the Centre hopes, will egg the discoms on to creating an “enabling ecosystem for expeditious implementation” of rooftop projects.
There are many problems with this approach. First, the capacity-linked incentive reflects anachronistic thinking, which encourages disregard for quality. Second, the proposed scheme seeks to shift the game from captive players to energy companies (independent power producers, or IPPs). In a tariff-based competitive bidding scenario, individual and small producers will be at a disadvantage. Further, a competitive bidding process would culminate in a power purchase agreement and a PPA is not particularly appropriate for a sell-only-surplus situation. Another serious omission is the absence of any policy direction on ‘net metering’, which would allow owners of captive rooftop plants to sell surplus power to the grid. The Centre should bring in a generation-based incentive. Discoms could buy rooftop solar power at the weighted average cost of all the power they buy. The policy should also make way for standardisation and self-certification.
In fact, the fundamental premise on which the proposals are based, is flawed. At a time when rooftop solar power is on a par with or cheaper than grid power, there is no need to ask discoms to create an enabling ecosystem. In fact, the need is to get discoms out of the way, perhaps with financial incentives.