Scaling up rooftop solar in SME sector in India

The micro, small and medium enterprises (MSME) sector is expected to contribute significantly to achieving the Government’s target of developing 40 gigawatt (GW) of rooftop solar capacity by 2022. Scaling up rooftop solar in MSME sector in India requires addressing issues related to lack of low cost financing, inadequate level of awareness and lack of rooftop aggregation models, according to the report Scaling up rooftop solar in SME sector in India from the Climate Investment Funds (CIF) and Deloitte Touche Tohmatsu India LLP.

The report evaluates key issues based on the primary survey done across 150 MSMEs in six industrial clusters (rubber and plastic; pharmaceuticals; auto; paper; food and beverage; textiles) in India, selected on the basis of a pre-determined criteria, and recommends possible solutions for triggering rooftop solar growth in MSME sector in India.

It highlights possible solutions for addressing the key barriers impacting rooftop solar growth in MSME sector and some them are:

• In the initial stages target clusters where likelihood of achieving intended outcomes highest higher and developing customized market plans is imperative.
• Indian rooftop solar market is currently not geared to implement large-scale rooftop solar projects under the OPEX model in the MSME sector without institutional or financial interventions. A dedicated aggregation vehicle would support implementation of rooftop solar projects across target MSME clusters
• Regulatory changes for adoption of group and virtual net metering could assist in implementing aggregation models in the MSME clusters and overcoming issues related to scale, diverse customer profile, and financing to a large extent.
• Supporting dedicated MSME based portfolios within existing/new lines of concessional credit shall support development rooftop solar projects in MSME sector.
• Dedicated scheme supported by Ministry of MSMEs with financial interventions like interest subvention and the Partial Risk Guarantee Fund mechanism through budgetary allocations required for initial pilot projects across target clusters.
• Creating awareness and capacity building through dedicated initiatives to bridge knowledge gaps support the support adoption of rooftop solar in MSME sector.