Rooftop solar (RTS) holds the promise of transforming India’s energy future, offering sustainable solutions to meet growing electricity demands. While innovative business models like CAPEX, RESCO, and solar cooperatives provide viable pathways for adoption, significant barriers continue to impede progress.
Despite their potential, challenges such as limited consumer awareness, financing gaps, and regulatory complexities continue to hinder the widespread adoption of RTS systems. Addressing these roadblocks is critical to achieving India’s ambitious solar targets.
In this part of the series, we begin by examining the key challenges obstructing RTS adoption in India. From consumer hesitations to systemic barriers, we’ll explore the issues in depth before uncovering actionable solutions and global lessons that can help India bridge the gap between ambition and action.
Challenges and Barriers in RTS Adoption
Low Consumer Awareness of Business Models: While innovative models like RESCO, solar leasing, and co-operatives exist, their benefits and workings remain poorly understood among potential adopters, especially in residential and small-scale commercial segments. Consumers often lack clear guidance on which model best suits their financial capacity, energy needs, and other preferences and priorities.
Complexity of Business Model Agreements: Long-term agreements under models like RESCO or solar leasing involve intricate legal and financial terms that can discourage individuals or small businesses unfamiliar with such contracts. Trust issues between consumers and service providers further deter adoption.
Space and Ownership Restrictions for Group Models: Business models like virtual net metering or solar co-operatives require coordinated efforts among multiple stakeholders, which is challenging in urban environments with fragmented ownership structures or tenant-landlord dynamics. Regulatory and logistical hurdles in pooling resources and sharing benefits also slow down uptake.
Financing Gaps for Models Targeting Low-Income Segments: Despite efforts to offer affordable RTS options, models like group net metering or co-operatives struggle to attract financing for low-income or marginalised groups. Banks and financial institutions often perceive such projects as high-risk due to the lack of collateral or stable revenue streams.
Reluctance of Discoms to Facilitate Innovative Models: Models reliant on net metering, such as group and virtual net metering, often face resistance from Discoms due to perceived revenue losses and operational challenges. Slow implementation of net metering policies, capped limits on RTS capacity, and procedural delays discourage participation.
Lack of After-Sales Support: Many consumers hesitate to adopt RTS under existing models due to concerns about the quality of maintenance and support services. Business models often fail to clearly outline responsibilities for long-term performance monitoring and maintenance, leaving consumers at risk of higher costs post-installation.
Administrative Bottlenecks in Model Implementation: Lengthy approval processes, lack of clarity in interconnection standards, and inconsistent application of regulations across states create barriers for service providers and consumers alike. Bureaucratic delays disproportionately affect innovative models that depend on multi-stakeholder cooperation, such as solar co-operatives.
Pathways to overcome barriers in RTS adoption:
While RTS systems have gained traction in India, their adoption remains uneven due to persistent challenges such as high upfront costs, regulatory complexities, and a lack of awareness among key stakeholders. Existing models, including rebates, subsidies, and incentives, have spurred some adoption but need to be more impactful in addressing the diverse needs of urban and marginalised communities. This section explores potential pathways to enhance existing RTS business models, drawing from global and Indian examples, and highlights what can be done to accelerate adoption.
- Addressing the cost barrier: Green financing mechanisms, such as low-interest loans and green bonds, can provide affordable capital to households, small businesses, and institutions. For instance, Ahmedabad has effectively leveraged low-interest loans to promote distributed solar adoption, achieving over 950 MW of capacity—equivalent to powering approximately 190,000 households. This showcases the potential of innovative financing in scaling decentralised renewable energy in urban settings. Similarly, Azure Power’s issuance of India’s first solar green bond in 2017 raised INR 3,200 crore to support large-scale installations, setting a precedent for institutional investments in renewables.
- Innovative Financing Models for Marginalised Communities: Innovative financing models like Pay-as-you-go (PAYG), community financing, and solar leasing for RTS have started gaining traction in India, though their implementation is still evolving. In Indian cities, targeted financing solutions are helping expand RTS adoption, especially for small and medium-sized enterprises (SMEs) and low-income households. For example, partnerships between Tata Power and Small Industries Development Bank of India (SIDBI), as well as concessional loans from the World Bank-State Bank of India credit line, are enabling financing for rooftop solar projects. These mechanisms reduce upfront costs and promote flexible repayment structures. For residential consumers and small businesses, initiatives like net metering and subsidy disbursements simplify the financial barriers to solar adoption. DISCOM-led models, which integrate consumer relationships with rooftop solar promotion, and community-based pooling of funds, have also been proposed to make solar energy accessible to marginalised communities.
- Innovative financing models such as Pay-as-you-go (PAYG), solar leasing, and community financing are gaining traction in India to make solar energy accessible to low-income households and small enterprises. Partnerships like the one between Tata Power and Small Industries Development Bank of India (SIDBI), supported by concessional loans from the World Bank-State Bank of India credit line, enable flexible repayment structures for rooftop solar (RTS) installations. These mechanisms reduce the upfront financial burden and promote greater adoption of solar energy. Additionally, community-based solar cooperatives provide an avenue for individuals and organizations to pool resources and invest in centralized solar projects. This model benefits those unable to install panels—such as renters and low-income households—by allowing them to share in the energy generation and cost savings. For instance, the success of Minnesota’s Community Solar Garden Program, which installed over 800 MW of capacity and reduced electricity bills for low-income households by 15%-30%, demonstrates the potential of such initiatives. Adapting similar models in India could enhance solar inclusivity, especially for underserved communities.
- DISCOM-Led and Net Metering Approaches: In urban areas, DISCOM-led models leverage existing consumer relationships to promote rooftop solar (RTS). For example, Delhi’s BSES Rajdhani Power Limited (BRPL) has introduced programs like the “Solar City Initiative,” which encourages households and housing societies to adopt solar energy by providing technical support, financial guidance, and streamlined net metering approvals. These efforts simplify the process for residential consumers and small businesses, reducing financial barriers to adoption. Similarly, Gujarat’s Surya Urja Rooftop Yojana offers subsidies of up to 40% for residential solar installations, significantly lowering upfront costs (Gujarat Energy Development Agency). Combined, these approaches empower marginalised communities and small enterprises to participate in India’s clean energy transition, demonstrating the effectiveness of DISCOM-led initiatives and subsidy-driven models in urban contexts.
- Streamlining regulatory frameworks: Complicated and fragmented regulatory frameworks deter investment and slow down installations. A unified national policy with consistent guidelines on tariffs, incentives, and approval processes can eliminate confusion and encourage broader participation. Delhi’s Solar Policy is an example of streamlining, with simplified approval systems and financial incentives such as capital subsidies and generation-based rewards. Policies like these could standardise net metering and community solar systems across states, making solar adoption seamless and scalable.
- Encouraging Public-Private Partnerships (PPPs): Public-Private Partnerships can play a transformative role in scaling RTS adoption by reducing financial risks and sharing costs. Models like RESCO and solar leasing allow consumers to access solar energy without upfront investments, with private companies handling installation and maintenance. For instance, Tata Power Solar Systems Limited (TPSSL), in partnership with Indian Bank, has implemented PPP-driven leasing models to promote residential solar systems under schemes like PM-Surya Ghar Muft Bijli Yojana. Expanding such collaborations can bridge gaps in accessibility and affordability.
Global Lessons and the Way Forward for India
Global examples provide valuable insights for enhancing rooftop solar (RTS) adoption. In Germany, feed-in tariffs and community-owned solar farms have successfully increased deployment by offering financial incentives and collective ownership models. In South Africa, the “Solar Photovoltaic for All” initiative in Cape Town demonstrates the effectiveness of community-based solar projects, where low-income households and small businesses participate in shared solar farms. Participants pay a monthly fee of $5–$10, reducing their electricity bills by 30–40% and lowering carbon emissions compared to grid power.
These international models offer useful lessons that can be adapted to India’s socio-economic context, helping to address the challenges of high upfront costs and limited access for marginalized communities. To foster RTS adoption, India must strengthen financing mechanisms such as low-interest loans, green bonds, and targeted subsidies. Additionally, simplifying regulatory processes and ensuring policy uniformity across states will create a more conducive environment for investments, enabling wider access to solar energy.
Promoting private sector participation through PPPs and leveraging models like solar leasing, power purchase agreements (PPAs), and cooperatives can also reduce the financial burden on consumers. Further investments in smart grid technology and energy storage systems will enhance the integration of solar power into the national grid, ensuring reliability and scalability. By combining these efforts, India can meet its ambitious solar capacity targets and ensure equitable, affordable energy for all.
Read Part I of this blog, “Innovative Business Models for Mainstreaming Rooftop Solar in India” here.