What to expect from India's new rooftop solar policy?

Earlier this month, India’s minister for new and renewable energy, Piyush Goyal, announced that the country’s rooftop solar policy is now ready to be placed before the union cabinet (refer). This policy is expected to lay out yearly targets to reach 40 GW of rooftop solar capacity and provide comprehensive details of operational and fiscal support for the rooftop solar market.

The Indian rooftop solar market grew 66% in the last 12 months despite the lack of any specific rooftop solar policy initiatives
The new rooftop policy is likely to consolidate and detail out already known aspects such as yearly targets, changes in capital subsidy scheme and schemes for low cost financing
If the new policy does not introduce mandatory rooftop solar installations for buildings, the policy release will likely be a non-event

There is no draft policy document in the public domain but we believe that the new policy will consolidate and bring all disparate fiscal and operational support measures for the market under one comprehensive framework including for example, steep expansion in yearly targets (refer), 15% capital subsidy for residential consumers and public buildings (refer) and low cost financing using funds from international developmental banks (refer). Other concessional benefits such as zero import duties on equipment and accelerated depreciation benefits (available until March, 2017) are likely to continue.

In the last one year (November 2014 – October 2015), India added 240 MW of rooftop solar capacity against 145 MW in the same period before this – a growth of 66% despite a largely non-functional rooftop specific policy framework.

It is not possible to underpin the 40 GW rooftop target on fiscal support measures such as subsidies, feed-in-tariffs or generation based incentives. The role of rooftop policy in our view should be to accelerate adoption rates by enabling various technical and operational measures as the market has extremely strong fundamentals with increasing commercial attractiveness vs. grid power.

When the cabinet passed the 100 GW target in June 2015, the Cabinet note mentioned several possible initiatives such as implementing mandatory rooftop installations for private power consumers. The note also mentioned making net-metering compulsory by incorporating measures in the Integrated Power Development Scheme (IPDS) (refer).

Further action on compulsory net-metering by power distribution companies and mandates on building owners to install rooftop solar can provide a significant fillip to the market. Given that most of the other initiatives have already been announced, if the rooftop solar policy fails to elaborate on such new measures, its release will largely be a non-event.