26 September 2019 | BRIDGE TO INDIA
Indian rooftop solar market grew at an estimated CAGR of 83% over past three years. While the market grows rapidly, operation and maintenance (O&M) provision is often ignored. Specialist rooftop solar O&M business segment has not taken off yet in India and remains a disorganized, underdeveloped market. Key reasons include low consumer awareness, tendency to cut costs, policy thrust on adding more capacity (rather than improving performance), low scalability/ profitability and lack of skilled personnel.
Rooftop solar O&M is a highly localised business requiring frequent site visits for cleaning and other maintenance tasks. The actual cost of performing full O&M services (cleaning, breakdown and preventive maintenance) is prohibitively high for small residential plants (< 100 kW) and plants in non-urban locations in comparison to the market benchmark fee of around INR 0.4 million/ MW per annum).
There are few specialised rooftop solar O&M service providers because of poor business viability and customer resistance to long-term contracts. Such services are therefore provided by EPC contractors or developers/ consumers in-house in most instances.
Figure: O&M provision for rooftop solar installations
Source: BRIDGE TO INDIA estimates
Note: Some part of services may be outsourced where O&M provision is retained in-house by system owner.
Unfortunately, the government has not helped the development of this market by referencing all policy initiatives and incentive schemes against commissioned or planned capacity (as against solar power output). There is no specific government policy initiative warranting robust performance or thorough O&M focus in rooftop solar in India. Most stakeholders including government agencies, EPC contractors and suppliers are focused on capacity growth with little emphasis so far on performance evaluation and monitoring.
Lack of focus on O&M is highly value destructive. As per BRIDGE TO INDIA estimates, Poor operational performance can not only cause significant financial loss to investors and lenders but also lead to customer backlash and wasteful use of government subsidies. The key to putting more emphasis on O&M and creating viable business models lies in creating customer demand. The government can play a critical role by undertaking consumer education, performance monitoring/ analysis and skilling initiatives.