Rooftop solar emerges not only as an environmentally conscious choice but also as an economically prudent decision for individuals and businesses alike
Rooftop solar installations have often been perceived as a costly endeavour, deterring many potential adopters from embracing this sustainable energy solution.
However, delving into the current state of the solar industry and dissecting the economic aspects reveals a commonly believed misconception regarding the pricing of the same.
One of the primary drivers making rooftop solar more affordable is the substantial reduction in the cost of solar panels. Technological advancements, economies of scale, and increased manufacturing efficiency have collectively contributed to a significant drop in the prices of solar panels over the last decade.
In the 2023–24 Union Budget, Rs 7,327 crore was allocated for the solar power sector, covering grid, off-grid, and Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PM-KUSUM) projects. This marked a 48 percent rise from the previous year. India's solar power sector has an estimated capacity of 7,48,990 megawatts, presenting a promising opportunity.
While government initiatives have also played a crucial role in making solar energy financially feasible for the masses, subsidies, tax incentives, and other financial support programmes further alleviate the financial burden on individuals and businesses looking to adopt rooftop solar. Schemes like the PM-KUSUM specifically target the agricultural sector, making solar adoption more affordable for farmers.
In addition to government initiatives, solar companies and startups are playing a proactive role in supporting consumer financing. Financing options are readily available, making it easy to finance up to 65 percent of projects, therefore enhancing adoption and affordability.
Furthermore, banks and financial institutions have introduced solar loan schemes with attractive interest rates tailored for both residential customers and small to medium enterprises (SMEs), simplifying the process of obtaining consumer financing for solar projects.
The implementation of solutions like virtual net-metering represents a significant leap forward in promoting the widespread adoption of rooftop solar energy. Given that rooftop structures may lack the necessary strength to accommodate solar systems, this innovation allows individuals without suitable roofs to harness solar energy.
Through virtual net-metering, people can now access and distribute energy credits within a community solar project, such as a solar farm, enabling broader participation in solar energy initiatives.
Contrary to the misconception that rooftop solar is an expensive upfront investment, the return on investment (ROI) for solar installations is impressive. The extended lifespan of solar panels adds another layer to the economic benefits. Solar systems typically last for more than 25 years if properly maintained.
Investing in rooftop solar ensures a secure and attractive return on investment (ROI) of 25–30 percent with a 3–4-year payback period, where one can essentially enjoy free electricity for over 20 years. Reduced energy bills and the potential to sell excess energy back to the grid through net metering contribute to a quicker payback period.
Homeowners and businesses can recoup their initial investment within a few years, making rooftop solar an economically viable and financially sustainable choice. Worldwide, India is the most economical country for producing rooftop solar energy, with a cost of $66 per megawatt-hour. In comparison, China's cost is slightly higher at $68 per megawatt-hour.
In 2024, newer innovations in solar cell technology, energy storage solutions, and system design will contribute to the cost-effectiveness and reliability of rooftop solar systems. These advancements will ensure that the energy generated from rooftop solar installations is maximised, providing more value for the initial investment.
Beyond the economic considerations, the shift towards rooftop solar aligns with global sustainability goals. A 5-kW solar system is equivalent to reducing 7.3 tonnes of carbon dioxide emissions every year. Rooftop solar, by reducing reliance on traditional fossil fuels, plays a pivotal role in achieving these sustainability targets.
As nations strive to meet their Intended Nationally Determined Contributions (INDC) under international agreements like the Paris Agreement, rooftop solar becomes not just an economic choice but a strategic imperative for a sustainable future.
As the world embraces sustainable energy solutions, rooftop solar emerges not only as an environmentally conscious choice but also as an economically prudent decision for individuals and businesses alike. The transition to rooftop solar is more feasible than ever, marking a significant step towards a cleaner, greener, and economically sound energy future.
(Radhika Choudary is Director and Co-founder of Freyr Energy.)