30 percent subsidy not enough for Rooftop Solar
Shubhra Mohanka is the Director of Solid Solar, a company that manufactures and exports solar products and components, and is also engaged in solar power plant installations. In an interview to Upendra Singh, she discusses the goals of her company and the solar power scene in India
Q:JNNSM has emphasised on rooftop solar installations; however, not much has been achieved in this regard, especially in Delhi. How’s your company faring in this sector?
I agree that rooftop solar installations have not done well in the country, and definitely, Delhi lags far behind. There are certain reasons for this, and the most prominent one is the cost of installing rooftop systems. In spite of the 30 per cent subsidy, you have to pay around Rs 1.9 lakh per kilowatt with the battery system. Even if we compare it with diesel gensets, it costs more – with a payback period of almost 8-9 years. Also, there are not many places in Delhi where rooftop installations can be parked. At the same time,
the dependence on diesel sets is not so high that people would opt for high cost power through solar rooftop installations. On the outskirts of the city, however, there are frequent power cuts.
Q:India has huge potential in the rooftop solar category. Has your company undertaken any research to figure out the workable means for its success?
Yes, the rooftop potential in India is very huge, and I think this should be given higher priority by the government than a megawatt-scale power plant. The reason is that for a megawatt solar plant, you have to deal with land issues, 30 per cent transmission
and distribution loss issues, the grid connecting issues, etc. On the other hand, in the case of rooftop installations, there is no issue of agriculture land, no tussle with land owners, space is available on roofs, and there is no need to worry about grid connectivity, as the
power could be used in the building itself. There is a need to enhance the financial bundling around these lines and to promote this as a sector. There is a need for an altogether different approach – project it as an alternative for diesel gensets for captive use. The upfront cost of a diesel set is low while the running cost is high, whereas it is just the opposite in case of solar rooftops. So, why not work on certain fi nancial packaging that brings down the upfront cost of solar systems and distribute it along the running cost… that would help the sector to grow. The problem should be seen from a different perspective. It is not that people don’t buy costly things, but you need to package it in an attractive manner.
Q:The government is providing 30 per cent subsidy for rooftop solar installations. Has it helped in creating a market for the sector?
The government gave subsidy and talked about connecting rooftop to the grid, and once it didn’t go according to the plan, it was let off. There is no talk of financial packaging. The 30 per cent subsidy that the government is giving to rooftop is not enough and I would say that if need be, reduce the subsidy and introduce an option of loans for the remaining amount. Fortunately or unfortunately, we are getting support from the government on megawatt- scale solar power plants and solar lighting products, but rooftop is one area that is still deprived of that benefit. I have seen that 5 out of 100 investors go ahead with rooftop solar installations whereas the rest talk
about the loaning process. There is opportunity, there is requirement, but the real issue is money that is involved upfront. If we approach the issue in a workable manner, the sector will grow.
Q:So, what needs to be done to promote rooftop solar in India?
One thing is clear; the initial cost of installing a solar power plant is very high. A 100-KW solar power plant means an investment of Rs 2-3 crore upfront, which is very high. Whenever we approach potential customers, the first thing they ask is whether they can get loans on the balance amount of 70 per cent as well. At places where power cut is a problem, people are still keen on putting up solar generating units with a payback period of 5-6 years when compared with diesel gensets running for 6-8 hours daily. Educational institutes and academies in areas like Greater Noida, Gurgaon and Manesar are keen on installing solar power plants, but the only problem is the absence of a loaning mechanism. I would bat for some kind of a financial package so that it becomes affordable and attractive. For instance, MNRE has tied up with NABARD, the nodal agency for rural banks, for providing solar-powered lights in rural areas. Under this programme, there is provision of subsidy as well as loan, and therefore, it is more affordable. So there is a need to devise programmes that are financially appealing to the people. We, as an organisation, have come up with an innovative proposition which increases the roof value. We approach the customers with the concept that solar panels could be used as roof shades and the entire area could be used as a café, gymnasium, meeting place, or for other purposes. Then, they are not just looking at it from a solar power development perspective, but eyeing returns on investment (ROI) for using their rooftops for solar installations.
Q:Discoms say that there are practical problems in installing and integrating rooftops with grid. What has been your experience?
At present, we are working on captive solar power plants, where power is being generated on rooftops and consumed there itself. As a result, we aren’t actually interacting with the grid. There are issues like Discoms want us to take commission even if we feed the power internally. However, we are avoiding this completely, the reason being rooftop installations are meant primarily for captive power. If there’s no need to take permission from a Discom for installing a diesel genset in one’s premises, it should be the same for rooftop solar which also generates power for captive use. I wonder why we are hung up on grid-connected rooftop solar installations. Are solar rooftops going to increase power generation so much that there will be a need to connect to the grid? Solar rooftops need to be viewed as backup, and plans should be devised accordingly with the help of financial packages.
Q:Despite all efforts, a major part of Indian rural communities are deprived of electricity. What opportunity do you see for your products in achieving rural electrifi cation?
There is immense scope in rural electrification and we are extensively exploring this domain. We are mainly involved in two ways – rooftop installations and solar lights. In the rooftop segment, we are running a CSR (Corporate Social Responsibility) initiative wherein installation of every 100-KW rooftop solar plant electrifies one village. We have been involved in the solar lighting production in a big way with a broad range of products that include solar torch, hanging lights, solar inverters, and street lamps with many features.
We are involved in various programmes run by government and NGOs. We are associated with a rural electrification programme called SEWA (Self-Employed Women’s Association), which provides energy-efficient cook stoves and solar lanterns to its members in various parts of India. The programme is run by SEWA Bank in collaboration with International Finance Corporation (IFC), and we are supplying solar electric lights. We are also working through the NABARD scheme, wherein we are making our own franchisees and our employees are doing marketing in rural areas. Under this scheme, we are aggressively promoting systems that can run TV, fans and lights. Here we are not merely concentrating on lanterns because being a solar product manufacturer; we have a whole range of products that suit rural communities who are deprived of electricity. We are also involved in the “Lighting a Billion Lives” programme run by The Energy and Resources Institute (TERI), wherein we are supplying 90 per cent of the lights across 4500 villages.
Q:Your company is a leader insolar product manufacturing in India. As awareness about these products is quite low, how have you been able to expand your market?
There is a huge opportunity in the solar power domain in India, and as far as opportunity in the solar product segment is concerned, I would say that it is still a virgin market. Being a nascent industry, you may not necessarily fi nd competition when you enter any area or region with your products. However, this aspect also works against you in the sense that the things are not at all in place and diligent planning needs to be done. You need to invest time to generate awareness in the customers from the concept level to its implementation and consequent benefits. A lot of sales and marketing effort goes into developing the market.
Q:What needs to be done to create awareness so that renewable energy usage could be enhanced to overcome the power crisis?
As a solar industry, we need to be innovative and think from a marketing perspective rather than just embarking upon whatever comes our way. As I said, in rooftop segment we are approaching the customers by offering them packages. If we approach them in a traditional way, we are not going to and anywhere. Unless and until some lucrative opportunities are shown to the customers, they may not be interested in undertaking a venture that’s probably in its nascent stages. In India, the work in the solar power sector is carried out primarily in project mode, wherein the governments issue tenders for projects and companies pitch in for them. And it’s not done because developers or companies are showing interest, but at the behest of the Ministry of New and Renewable Energy (MNRE) or state governments.
Q:Which of your products been most successful and the reason for that?
We have a huge range of products catering to various categories and usage, and we are marketing these as consumer durables. We have our own R&D teams that keep on working on various aspects that may suit the end user. Lighting has always been seen as a major area of concentration, but in recent times, it has been seen that the systems that can run TV and fan are in great demand in rural areas. For a product to be successful, a continuous effort needs to be put in right from the conceptualisation to the implementation level. Right now, we are focusing a lot on inverter systems for the retail market. It may not be providing good revenue at present, but in the long run, this is going to be a good business proposition.
Q:Do you think that creating awareness among the masses about renewable energy products may bring about a change in their perception towards their usage?
Yes, definitely. The primary requirement for any product to sustain is its proper marketing – defining its qualities, and the services that it would provide to the intended users. In order to create awareness and make our products available to the end user, we have deployed teams for marketing at various levels in rural areas. We keep on organising workshops at village and block levels to teach the villagers about the benefits of solar power, and accordingly, they are informed about the various products available and their usage. This is a heavy mechanism, yet the market is picking up as the financial proposition for customers is good. Subsidy is being provided by the government and loan facility is available for the remaining amount. We are working in close collaboration with certain Sehkari banks in rural areas of Haryana, Jammu & Kashmir, north Bihar, Narmada and Malwa regions in Madhya Pradesh, Uttar Pradesh, and at other places. Aryavrat Gramin Bank is also providing subsidy and loan to villagers so they can purchase solar power products.
Q:What are the latest technologies and processes that you are working on as far as off-grid solar plants are concerned?
From technology perspective, we are really on the back foot. Let us take the case of off-grid inverters. There is no worldwide market for off-grid inverter, but here in India, it is of immense value. The world leaders such as countries like Germany and Spain basically deal in grid-connected inverters, and from that point of view, India is at a loss as far as advancement in inverter technology is concerned. The effi ciency of off-grid inverters are at best 8-85 per cent, whereas when you talk about grid-connected ones, their efficiency is around 97-98 per cent. So, for solar off-grid, a defi cit of around 15 per cent in effi ciency is huge. Our company intends to aggressively pursue that technology, and we have already started working towards that goal. Once we master that technology, we could potentially be the largest exporters to the countries in Africa and Asia. Lighting is also one fi eld wherein we could be world leaders, as the situation of rural electrifi cation in Africa and some Asian countries is similar to our situation. Working aggressively on these two technologies will not only help our domestic market, but at the same time we could be leading exporters in the world.