Rooftop Solar Potential of India in 2025

India Ranks 4^th globally in overall renewable energy and as of 2024, 46% cumulative installed capacity comes from non-fossil fuel sources. India has reached a significant milestone in its renewable energy journey, with the country's total renewable energy capacity crossing the 200 GW (gigawatt). This remarkable growth aligns with the country's ambitious renewable energy target of achieving500 GW from non-fossil sources by 2030. Solar power leads the way with 94.17 GW (as of Nov 2024) among all the sources of renewable energy like Wind, Hydro, playing a crucial role in India’s efforts to harness its abundant sunlight.

And rooftop solar presents a great potential with over 300 million households and 63 million MSMEs alongside nearly year-round abundant sunshine. The rooftop solar program was initially aimed for an installed capacity of 40 GW by 2022. The timeline for the program has now been extended till March 2026. As of October 2024, the country’s grid-connected rooftop solar capacity stood at 14.45 GW or ~15.7 %of the installed solar capacity.

Now let us understand what really led India to become a renewable energy center and how it will boost its further growth.

Growth Drivers

1. The Government Push

India aims to achieve 1 crore rooftop solar installation in the residential sector and install 30 GW of cumulative rooftop solar capacity by 2026–27.

Launch of the National Portal and the PM Surya Ghar Muft Bijli Yojana

One significant move was the launch of a national portal that functions as an e-marketplace in 2022, by the Ministry of New and Renewable Energy (MNRE). This platform allows consumers, vendors, and representatives of banks providing loans to interact seamlessly. Since its launch, the portal has streamlined processes and contributed to increased adoption of solar rooftops. Furthermore, the government has announced specific distributed renewable energy obligations for electricity distribution companies (DISCOMs), which will further promote the adoption of solar rooftop systems.

Additionally, in February 2024 the Government of India launched the PM Surya Ghar: Muft Bijli Yojana to increase the share of solar rooftop capacity and empower residential households through the Central Financial Assistance (CFA)/subsidy for up to 3kW. The scheme has an outlay of Rs 75,021 crore and is to be implemented till FY 2026-27.

By March 2025, the number of rooftops solar installations under this scheme is projected to surpass 10 lakhs. The target is to reach 20 lakh installations by October 2025, 40 lakhs by March 2026, and one crore by March 2027. Within just nine months of launching in February 2024, the scheme has already achieved 6.3 lakh installations, averaging 70,000 per month. This marks a ten-fold increase in monthly installations compared to the 7,000per month before the scheme’s launch. States such as Gujarat, Maharashtra, Kerala, and Uttar Pradesh have shown exceptional progress, benefiting from strong infrastructure and active stakeholder collaboration.

No Feasibility for systems less than 10 kW

In the same month (February 2024), the power ministry made some amendments that allows solar rooftop PV systems of up to 10 kW capacity to be exempted from the requirement of technical feasibility study. Meanwhile, the timeline for completing the feasibility study has been reduced from 20 days to 15 days for systems with more than 10kW capacity.

2. Financial Incentives

In addition to subsidies, the government provides various financial incentives, such as tax benefits, easy financing options, and net metering policies, which allow consumers to sell excess power back to the grid. These incentives have made rooftop solar installations more affordable and attractive to both residential and commercial consumers.

3. Declining Solar Panel Costs

The cost of solar panels has decreased significantly over the years making it quite affordable.

4. Rising Electricity Prices

Electricity tariffs have been historically rising due to various factors include increased import of coal higher demand and increased operational expenses. A year on year 2-8% of tariff increase has been seen and is also expected in coming years. The percent increase will vary based on the DISCOM or State.

5. Financing

Access to finance has literally opened doors to thousands of commercial consumers including the MSMEs. Many banks including the State Bank of India now provides solar loans, moreover companies like Aerem provide tailored collateral free loans along with access to wide range of listed/empaneled vendors through the Aerem app. You can also check out Aerem’s collateral free affordable financing.

6. Imposition of Regulatory Mandates

Some administrative authorities in India have implemented regulations that mandate the installation of solar PVsystems on the rooftops of residential buildings. These authorities sought to take this encouraging step to provide a fillip to the growth of solar installations in their respective jurisdictions.

For example, in a move to promote renewable energy, the Lucknow DevelopmentAuthority (LDA) revised its solar panel installation guidelines. During its 183^rd board meeting held on 4^th December 2024, the LDA made it mandatory for all residential properties with a plot size of 1,000square feet or more to install rooftop solar panels under the PMSurya Ghar scheme. Previously, this requirement applied only to plots measuring2,000 square feet or more.

7. Sustainability goals and implications for the MSMEs

Today large manufacturers and companies are more focused on sustainability than ever before. They have set their Net-Zero goals and ambitions. In their transition towards their Net-Zero goal, they not only account and decarbonize their own operations but also aim to decarbonize the entire supply chain. That’s when they encourage vendors and suppliers to reduce their emissions. Moreover, regulations like the CBAM (Cross Border Adjustment Mechanism) from the European Union will tax non-EU exporters (from the year2026) for the emissions from their products. Hence it only makes sense for the exporters and MSMEs to reduce their emissions and installing solar rooftop plants is one of the easiest ways to begin with.

Growth trends

With all the government policies in place, India’s rooftop capacity is bound to increase significantly. Moreover, the demand of green hydrogen will also encourage large utility scale solar plants

Forecasts

With all these factors at play, the rooftop solar market in India is expected to experience robust growth. By2025, analysts project that the installed capacity of rooftop solar could reach around 40 GW—up from approximately 10 GW in 2023. This represents a compounded annual growth rate (CAGR) of over 30%.

Challenges in Rooftop Solar Industry

Despite the optimistic outlook, several challenges pose a risk to the anticipated growth of rooftop solar in India. These include regulatory hurdles, inconsistent state policies, and the need for better grid infrastructure. Addressing these issues will be critical to unlocking the full potential of rooftop solar energy.

• ‍Regulatory challenge on the Net-metering front

A major challenge that added to the hesitation of installers and consumers in setting up rooftop solar systems was the uncertainty and inconsistency of rooftop solar-related policies and regulations. This is especially true for net metering policies across many states.

In some states, the delay in approving net metering connections by DISCOMs is a major barrier. This sometimes leads to residential customers reversing their decision to purchase a rooftop solar system.

• ‍Mandate of Domestic Modules under Subsidy Schemes

The mandate of using domestically manufactured, or domestic content requirement (DCR), modules in subsidy-based residential rooftop solar projects has been a deterrent. DC modules are more expensive than imported modules.

• ‍Anti-Dumping duties to rise in solar prices

India has imposed antidumping duties on textured toughened (tempered) glass in solar panels and solar thermal products from China and Vietnam for a period of six months, starting Dec. 4, 2024. This duty will ultimately increase prices of installing solar for commercial and Industrial consumers.

Way forward

The rooftop solar market in India is experiencing significant growth, fueled by strong government support through subsidy, decreasing costs, and rising energy demand. Although challenges still exist, the overall outlook remains positive, with considerable opportunities for expansion in the residential, commercial, and industrial sectors. As more consumers and businesses recognize the benefits of solar energy, the rooftop solar market is poised to play a crucial role in the country’s energy transition.

The potential for rooftop solar in India by 2025 is promising, characterized by rapid growth trends driven by government initiatives, technological advancements, and increasing awareness. As India works toward its renewable energy goals, it is essential for stakeholders—including the government, industry, and consumers—to collaborate and address ongoing challenges. With the right strategies in place, rooftop solar can significantly contribute to India’s shift toward a sustainable energy future.