Solar power isn’t just good for the environment, many consumers find it good for their pocket as well. It is the cheapest new-build for electricity in India. Forty percent of India’s ambitious 100 GW solar power target for 2022 is meant to come from “rooftop” photovoltaic (PV) generation, or solar cells installed by end-users (they can install it anywhere on their premises). But the actual penetration, thus far, is only of a very low percent.
Most solar power generated has come from large grid-scale solar farms, often through large-scale bidding. Rooftop solar was picking up steam till the recent Electricity (Rights of Consumers) Rules gave a clarification on how to price rooftop solar power; this, industry experts fear, could stifle, if not kill, rooftop PV. The new norms will lower the payments to rooftop PV owners, but given solar prices have fallen, a decrease in prices may be necessary and fair.
The updates are an important evolution in the hitherto hodge-podge consumer PV rules that different states follow, and it is time for regulators and policy-makers to find a new framework for pricing rooftop solar that isn’t just based on explicit or implicit support mechanisms, but works for all stakeholders—not just the PV-owner but also the discom.
The crux of the issue is pricing. Grid-scale power is easy to price—there is often a bid that discovers the price and the discoms sign agreements to buy such power. What about rooftop solar? There are two difficulties with setting prices for rooftop solar. First, not all consumers are the same. Current retail electricity tariffs differentiate between residential, agricultural, commercial and industrial users. The latter two segments, on average, overpay to cross-subsidise irrigation pumpsets and households.
Even within a category, we have progressive slabs or tiers of pricing, with larger (ostensibly richer) consumers paying more than the category average. Second, where does the rooftop solar power go?