Rooftop solar's promise hits reality: Who pays for night-time power?

Battery mandates and lower buyback tariffs aim to ease discom losses, but risk slowing household adoption of solar power

Think of “roof”, and you see solar panels. Think of “solar”, and you see the energy generated during the day — powering appliances and even feeding into the grid, from which it can be brought back at night when the sun is not shining. It’s the world’s most uber solution, where each of us becomes a generator of electricity. It works because solar is modular: The panels can fit almost anywhere, unlike thermal or nuclear generators. While building utility-scale solar plants requires vast amounts of land, which is always scarce and often contested, in this model every available roof becomes a power plant.  

 You may ask why I am expounding on the known advantages of rooftop solar. I believe the potential is enormous. Then why is progress still not at a transformative scale, despite the Union government’s programme to incentivise rooftop solar in offices and homes? It is not the lack of policy or intent. The real question is: How will this technology integrate with existing distribution systems? 

The challenge is not unique to India. All new technologies follow a similar path: They must find ways to displace the old to secure their place in the sun — in this case, quite literally. The fact is that solar technology, being intermittent and providing electricity only when the sun shines, requires some form of backup. Remember that night-time energy consumption is often as high as, or even higher than, daytime, when natural light is available and there is typically less need for heating or cooling. The ideal arrangement is that solar panels generate electricity during the day, part of which is consumed on site, while the excess is either “exported” to the grid or stored in batteries, which are then tapped for use during non-sun hours. Since batteries are still expensive, exporting to the grid remains the most practical option. In this setup, the distribution company (discom) or power utility serves as the backup.  

This is where the going gets tough. Take the case of Kerala, which runs one of India’s most successful rooftop solar projects. The state has installed rooftop systems aggregating 1.5 gigawatts (gw), reaching 2 per cent of its 10 million household customers. In August, the Kerala State Electricity Board (KSEB), which implements the programme, said its financial losses had become unsustainable. The problem was that the KSEB was buying electricity from rooftop generators during the day, when the rates were low, and selling an equivalent amount back to them at night, when the cost was high. With only 2 per cent of consumers served through this programme, the burden on electricity rates increased — this in turn raised the bills for the remaining consumers. So, the KSEB issued a draft order, which would cap net-metering capacity, put a levy on grid charges, and introduce tariffs based on time-of-day calculation. Just as soon as this order came out, the rooftop programme stalled; within a month, installations had fallen by half.  

In November, the Kerala State Electricity Regulatory Commission (KSERC) issued the final notification for grid-connected rooftop systems. This is an attempt to reduce the burden on the discom by mandating new connected households to install battery storage so that their night-time power purchases are reduced. Rooftop solar systems above 10 kilowatts (kw) would need to have 10 per cent battery storage and those with 15-20 kw would require 20 per cent. After 2027, even smaller 5 kw systems would require storage. The policy also introduces incentives through a gross metering mechanism, offering higher tariffs to customers who supply solar power during peak hours. Customer bills would be settled at the end of each financial year. After deductions for fixed and grid charges, any surplus or banked units would be paid at ₹3.08 per kilowatt-hour (kwh) for existing customers and at ₹2.79 per kwh for new connections — much lower than peak electricity rates. The notification has been stayed by the Kerala High Court and it will be interesting to see how this matter will be resolved.  

The question we are left with now is: What is the regulatory environment that will work best for rooftop solar producers (households) but also for energy distributors? Or, can there be ways to build solar futures without relying on the distribution route, particularly in countries and regions that lack a grid today?  

News coming out of neighbouring Pakistan suggests a different path. The country faces cripplingly high energy costs because of power shortages. It has, however, removed import duty on Chinese solar panels and lithium batteries. International energy analysts estimate that by 2024, Pakistan installed 25 gw of net-metered distributed solar, compared to 50 gw of installed grid power, and imported 1.25 gw of lithium batteries to support off-grid systems. At this pace, by 2030 Pakistan could meet 100 per cent of its daytime electricity demand and 25 per cent of its night-time demand through solar. But reports indicate this transition is adding to costs of the discom, prompting pushback and a policy review. It is not clear where this will go.   

This is the central energy question of our age: How will new energy systems displace, replace, or retrofit the existing fossil fuel-based grid, and what must we do differently? It is a question that we all must watch closely.

The author is at the Centre for Science and Environment. sunita@cseindia.org, X: @sunitanar