Residential Rooftop Solar Market in India : What’s stopping adoption? The 3A’s phenomena

An ear-to-the-ground analysis conducted by interviewing numerous homeowners reveal interesting insights eliciting non-adoption of residential rooftop solar.
In the current scenario, residential customers do not see value of a solar system beyond the savings they offer on the electricity bills. An extensive field study revealed the barriers which prevent homeowners from going solar.
The new year’s eve of 2016 presented a pleasant gift to the grid connected rooftop solar sector in the form of 30% subsidy funded by a Rs 5,000 Crore support fund, scaled up from the previous sanction of Rs 600 crores. The next six months witnessed majority states adopting net metering as an incentive to boost residential rooftop in their regions. As a nation aiming for a 100 GW installation target, 40 GW through rooftop installations, India has only been able to install 1.2 GW rooftop solar out of total 12.5 GW solar capacity installation till date. Achieving a 32x scale to current installation within next 5 years would require movement of solar industry’s adoption curve from its present early adoption stage to the growth stage.
A team from Sangam Ventures, an early stage venture fund that invests in startups building sustainable energy solutions aimed at inclusive development and creation of communities that are resilient to climate change, set out on ground to dig deeper into reasons for non-adoption of residential rooftop solar. The team travelled to Jaipur, Nagpur and Vijayawada to understand customer outlook towards solar & collect qualitative feedback about existing residential rooftop solar market. The choice of cities gave the team a range of customer profiles to study and helped form a high level understanding of the barriers to adoption of solar by individual homeowners.
The customers varied on income levels, awareness about solar, access to roof, education levels and on many other fronts. Demographic differences represented itself in the importance homeowners placed on various aspects of rooftop solar solutions. Each customer interaction was aimed at gauging current awareness about solar rooftop solutions, its savings potential and costs involved.

Solar Panels
Solar Panels

Customer insights from the field trips can be represented in A-A-A framework which cover the challenges for adoption of solar as well as bring forth the opportunities for new entrepreneurs –
Awareness: The awareness about rooftop solar system is limited to the amount of public broadcasting done by local government at city level. Nagpur homeowners, for example, were already introduced to one application of solar in the form of rooftop water heaters. There was, however, very little understanding of how a solar PV system really works. The individual components that make up the system is not a common knowledge and customers were not much aware of companies to approach for installing solar on their rooftops. Though solar PV system requires very low operations & maintenance efforts, customers were concerned about the long run functioning of the systems. In absence of concerted efforts towards educating customers by local renewable energy agencies and solar companies, awareness remains to be a challenging issue to be solved.
Affordability: Depending on the range of awareness, customers were in different stages of adopting a solar solution. High upfront costs are a no-go even for households who are at the advanced stages of awareness. Financing schemes available with public sector banks are in the form of extension on home-loans which keep out the customers with not-so-great credit profiles. State sponsored incentives are a ray of hope in affordability to adopt solar but customers do not wish to own the responsibility of securing the approvals for the same. Solar solutions need to be made more affordable to price sensitive residential customers.
Aspiration: In almost all customer interactions, solar never appeared to be a “wanted” product or service for the homeowners. The buck stops at the solar system not being a very exciting product and the perceived benefit of owning a system didn’t make the customers want it. Investment into residential solar fails out to competing needs of customers such as ownership of air conditioner or two wheelers. Solar system on rooftop doesn’t yet grant an uplift in social status to those who are aware of solar and can afford it. Many homeowners in Jaipur, for instance, with access to flat rooftop would not trade off the access to terrace for installing solar simply because the perceived benefits don’t make a cut for decision making.
Rooftop solar at residential level has a value add beyond just providing electricity from an alternative source. For certain regions, residential rooftop solar can act as a decentralised energy source that powers homes impacted by unreliable electricity supply from grid. Rooftop solar companies, often, pitch solar as a mechanism to contribute positively to the environment. A bulk of present customers only concern themselves with the savings potential of solar and would be interested in knowing the payback periods, upfront costs etc. The savings, however, are presently very insignificant primarily because of subsidised residential electricity tariffs and hence, the intuitive benefit of solar is not luring enough for customers to adopt solar.
An increase in adoption of rooftop solar by residential customers will require multi-stakeholder intervention from the solar eco-system. Government bodies and local renewable energy agencies would need to devise newer communication channels to build awareness about solar and the value it generates for consumers. Large players with proven capabilities should leverage financing agencies to build funding models to tap this underserved market. Local system integrators need to spend efforts to build awareness among residential prospects. Original equipment manufacturers should pass on the benefits of economies of scale at residential level to the end customers. Homeowners will aspire for solar system once they can clearly understand the value it offers for the entire household. The product itself in the end should be fairly intuitive, easy to understand and communicate value beyond the savings on electricity bills.
Authors: Aniket Baheti & Erich Nussbaumer
Aniket works with Sangam Ventures as an Entrepreneur-in-residence to formulate viable business models which enable adoption of residential solar solutions. He has been actively involved in Indian solar sector since the launch of JNNSM in 2009. He is a B.Tech & M.Tech (Energy) from IIT-Madras and an MBA from ISB.
Erich is currently pursuing his Masters in Public Administration in International Development at Harvard Kennedy School, USA. He interned with Sangam Ventures during the summers this year and dedicated his time to interact with Indian homeowners and delved deeper to generate valuable insights about residential solar sector.

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