Webinar Insights: “Residential Rooftop Solar Market Evolution in India”
With a total installed capacity of about 4 GW, the Indian rooftop solar market have been driven by installations in the C&I segment, which account for about 75% of the total installations. However, with this segment becoming increasingly saturated, players are turning to other segments such as the residential customers which have been relatively untapped, for higher growth opportunities.
With the intent to understand the ongoing as well as anticipated developments in this sector, JMK Research organized a webinar on “Residential Rooftop Solar Market Evolution in India” on September 9, 2021. The eminent panellists for this session were:
- James Hou, Head of Sales- India and SEA, GoodWe
- Ravinder Singh, Chief Solar Rooftop Business, Tata Power
- Ritu Lal, Senior VP, Amplus
- Shravan Sampath, CEO, Oakridge Energy
- Megha Goel, Senior Vice President, Encourage Capital
- Hiten Parekh, Chief Business Officer, SolarSquare Energy Pvt. Ltd.
Mr. James Hou started the session by giving a brief of GoodWe, and how it has become one of the major players in India, especially in the rooftop solar segment. GoodWe has a total production capacity of 20GW for solar inverters and 400MW for battery manufacturing, and has global installation capacity of 23GW. GoodWe also has ties-up with many renowned companies such as General Electric (GE).
Being a leading player in the segment, Mr Ravinder Singh from Tata Power began by providing a snapshot of the Indian rooftop solar market and Tata’s progress in the same. Tata has summoned over 22,000 rooftop solar customers, which accounted for 8-10% of its revenue, and 80% of its transactions in 2020. Going forward, Mr. Ravinder opines that residential rooftop solar is at present 14-15% of overall rooftop solar market. This is likely to scale up by 10 times its current size in the next 5 years, accounting for 25-30% of the total installations. He further elaborated that residential rooftop solar so far has been a subsidy driven product which has its own set of challenges. In many state tenders, pricing is lesser than the system costs with two notable exceptions i.e. Gujarat and Kerala. However, there are notable trends which suggest that customers are moving away subsidies and are looking for products with highest quality, and in case of high net-worth individuals, the product should be aesthetically pleasing. Another trend in tier 2 cities, where there are power reliability issues, is that customers are looking for hybrid solar options over inverters. Off-grid systems are move prevalent in the North-eastern regions and in the states of Bihar and Uttar Pradesh, but is yet to pick up in other regions. Mr Ravinder concluded by saying that the residential rooftop solar segment is underserved and developers need to give consumers assurances when it comes to maintenance and generation of the project. Going forward, he believes that to scale this segment, players need to adopt a DISCOM-like model, where the customer has zero to no upfront costs, there are some grid discounts, presence of a local on-ground teams and long term performance guarantee from players.
Ms. Ritu Lal began by voicing Mr. Ravinder’s points on the importance of aesthetics, especially for high net-worth customers, who are willing to paying for good looking and high performing installations. However, this segment accounts for only 25% of the market. The remaining 75% still go for the base products available. The main issue, according Ms. Ritu, are the long-term performance guarantees. This is a major reason why residential customers prefer going with established players such as Amplus and Tata who have a proven track record. Lastly, Ms. Ritu believes that moving away from subsidies will help in market to become a financially viable options, with people taking it up due to its merits and just because of the subsidy it provides.
Mr. Hiten Parekh started by explaining how SolarSquare pivoted to the residential rooftop solar segment, starting in Madhya Pradesh by winning a 5MW subsidy allocated residential rooftop solar tender in the state. SolarSquare has tied up with companies such as Panasonic and GoodWe to provide premium equipment, provide pre-fabricated installations and also provide on-site troubleshooting and maintenance. They have also tied up with financing institutions to provide collateral-free financing options. He further explained how Gujarat has played a leading role in the residential rooftop segment, with over 3000 homes solarized amounting to 1.1 GW of installations. Gujarat’s success is due to the government’s active participation in raising awareness, Discom’s active participation and lesser entry-barriers for players. Mr. Parekh believes that if other state try to do the same, rooftop solar can have a potential growth of 10-15 GW in the next 12 months.
Mr. Shravan Sampath highlighted Oakridge’s standing in the rooftop solar market, with its focus on being predominantly in the north Indian states. Oakridge offers financing scheme to customers by taking loans on its own accord, which enables them to streamline the financing process. This enables Oakridge to become a one stop solution for its customers, by offering installations and on-site maintenance services. He mentioned that majority of the challenges faced are on the regulation side, with delay in subsidy payments denting consumer confidence. Also, quoted CAPEX prices are very low, which leads to players cutting corners in terms of the quality of products use and maintenance provided to make the project financially viable. Mr. Shravan also highlighted that these insights have been passed on to the World Bank, who are coming up with a line-of-credit specifically for the residential segment to mitigate these issues. As the residential market grows, Mr Sampath believes that developers need to develop an all-in-one service product which includes insurance, maintenance, financing and guarantees over a period of 5-10 years to make the customer feel confident while purchasing the product.
Ms. Megha Goel began by highlighting the need for a digital platform for residential consumers to avail financing. She elaborated that there need to be a standardization of terms used by the industries to help the customers to make an informed decision, in the technical and well as the financing domain. Further, she believes that in order to scale rooftop solar, installations need to grow in areas other than tier 1 cities and the growth cannot be subsidy-dependent. Ms. Megha opines that while embedded financing schemes is a good transitionary measure, it might not be suitable for all customer classes and will not be a viable option in the future. Assessing the market size for residential solar is also a challenge, in her opinion, due to the absence of data points to map the historic performance and trends given that this market is still in its nascent stage. From a financing perspective, Encourage Capital has a clear understanding of which customer class they are targeting, which mostly include retail and salaried consumers who have a batter track record, vis-Ă -vis self-employed customers given its associated risks.
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