India’s solar energy sector underwent a transformative year in 2024, with non-utility solar installations—including rooftop and off-grid systems—accounting for a significant 25 per cent of the total 24.5 GW solar capacity added during the year. This marks a significant shift from historical trends dominated by utility-scale projects, according to a report by SBI Capital Markets Ltd.
The rooftop solar segment emerged as a key growth driver, adding 4.6 GW in 2024, a 53 per cent year-on-year (y-o-y) increase, while off-grid solar installations expanded by an extraordinary 197 per cent. The rapid growth reflects a shift in India’s solar landscape, supported by favourable policies, affordable distributed solar solutions, and growing demand from residential and commercial & industrial (C&I) consumers.
The residential segment is fast gaining prominence, buoyed by the PM-SGMBY (Prime Minister’s Solar Grid Mission for Bharat Yojana), which aims to achieve an ambitious 30 GW of capacity. In just 10 months, the programme has enabled 0.72 million installations, marking a ten-fold increase in monthly adoption rates. Generous capital cost subsidies under the programme have significantly shortened payback periods, making rooftop solar an increasingly viable option for households. During the September 2024 quarter, residential consumers accounted for nearly 85 per cent of all new installations.
The programme is also creating a vibrant ecosystem for manufacturers and developers, with an estimated market size of ₹1.2 trillion.
The growth in the residential rooftop segment is propelled by a combination of factors: high residential electricity tariffs, favourable net metering policies, and state-level support. The programme is also creating a vibrant ecosystem for manufacturers and developers, with an estimated market size of ₹1.2 trillion. Key beneficiaries include manufacturers of modules, inverters, and mounting equipment, as well as EPC players leveraging the capex model to tap into subsidies.
While the C&I segment currently accounts for 75 per cent of installed rooftop capacity, residential installations are poised to close the gap in the medium term. The C&I sector continues to thrive on tariff differentials, with open access renewable power providing up to 20 per cent cost advantages in States like Gujarat, Karnataka, Rajasthan, and Tamil Nadu. Medium, small, and micro enterprises (MSMEs) also present a promising growth area, with an untapped rooftop solar potential of 18 GW. However, limited access to low-cost financing has restricted their uptake to under 1 GW so far.
For residential rooftop solar to maintain its momentum, challenges such as limited rooftop space and access to affordable financing need to be addressed. Expanding net metering benefits to sub-1-kW consumers and adopting high watt-peak (Wp) panels could unlock significant additional capacity, it said.
India’s total rooftop capacity reached 15.67 GW as of December 31, 2024. Gujarat leads the pack with 4.8 GW of installations, followed by Maharashtra (2.8 GW), Rajasthan (1.4 GW), Kerala (966 MW), and Tamil Nadu (876 MW).