India Rooftop Solar Market Targets Record 4 GW Installations in FY2024

India's rooftop solar commercial and industrial market is on track to add a record 4 gigawatts of capacity in fiscal year 2024, with 2 GW already installed between April and July 2023, driven by falling module costs and improved financing for businesses. The micro, small and medium enterprise segment represents the next major growth frontier, with an estimated 15 GW of untapped rooftop solar potential.

As of July 2023, India's cumulative rooftop solar installed capacity stood at 10.9 GW, representing approximately 15% of total solar installations in the country. Annual additions have grown from a negligible base before fiscal year 2019 to a consistent 1.9 to 2.2 GW per year. The MNRE has extended Phase II of the Grid-Connected Rooftop Solar Programme to March 2026 after India fell roughly 80% short of its original 40 GW rooftop target by end-2022. Gujarat, Andhra Pradesh, Telangana and the union territory of Delhi have the most favourable regulatory and commercial ecosystems for C&I rooftop solar development.

State electricity distribution companies in Tamil Nadu and Uttar Pradesh continue to restrict rooftop solar uptake for high-paying C&I customers, through delays in net metering approvals or transitions to less favourable gross metering and net billing arrangements. Financing remains a significant constraint: rooftop solar loans carry higher interest rates and longer approval timelines than other solar market segments, eroding the segment's superior return on investment profile. The Green Open Access Rules 2022 have shifted some C&I solar demand away from rooftop toward open access, further fragmenting policy attention.

The World Bank is expected to approve a US$100 million payment guarantee fund covering up to 50% of debt financing for grid-connected rooftop solar projects targeting MSMEs. Virtual net metering and peer-to-peer trading are emerging as regulatory innovations that allow consumers at different locations to aggregate power from a single large rooftop installation, or trade excess generation within a distribution company's jurisdiction. IEEFA and JMK Research recommend that policymakers introduce separate renewable purchase obligations specific to rooftop solar and issue uniform central regulatory provisions aligned with the Green Open Access Rules to drive consistent national market development.

Key figure — 15 GW — estimated untapped rooftop solar potential in India's micro, small and medium enterprise sector, despite MSMEs accounting for roughly half of industrial electricity consumption.