
PwC58
Solar rooftop developers
Methodology
PwC prepared a questionnaire asking
relevant questions to stakeholders related
to the rooftop solar sector in India. The
questionnaire covered their areas of
interest and views on future growth as well
as the challenges faced by developers in
the scale-up of the rooftop portfolio. The
consultations were conducted in person to
gain insights from the respective experts
in the rm and understand the company’s
vision towards rooftop PV growth.
Discussion points
PwC consulted various developers,
most of whom highlighted a similar set
of challenges. The biggest challenge
includes the non-standardisation of
PPAs, which increases the risk of the
project and, in turn, makes project
nancing a challenge. The availability of
CTF funds (concessional funds) to banks
has brought in signicant momentum
by reducing the interest rates for rooftop
projects; however, the developers also
perceive long-term availability of these
Discussion points
All the banks and nancial institutions
consulted have a more than 40% share of
the solar market, out of which the share
of the rooftop solar market is at least 5%.
Traditionally, banks charge an interest of
10–11% to IPPs for rooftop developers.
These banks offer a higher interest rate
due to the absence of any concessional
funding support. However, other banks
with concessional funding support are
providing loans to developers at a rate
of 8.35–10.55% depending on their
credit ratings and risks in the proposed
projects. The portfolio of projects for
rooftop nancing for the interviewed
banks varies from 1 kW to 1 MW for a
single project.
Since the rooftop market is at quite
a nascent stage compared to large-
scale projects, banks face challenges
in successful disbursement of loans.
One of the biggest challenges faced by
most banks is the non-standardisation
of PPA terms (no inclusion of deemed
generation or right-of-way terms in
private PPAs) which makes the projects
quite risky and hence delays/increases
the nancing costs. Additionally, most
rooftop projects have an off-taker risk
as the buyer of electricity from plants is
mainly the end consumer whose credit
rating is a challenge in most situations.
The size of rooftop projects is another
big challenge for banks as the efforts
required in loan closure of large projects
are similar to those in small projects,
which actually increases the nancing
cost of smaller projects. This is why most
banks have preferred to nance projects
under the aggregation model, where a
portfolio of projects can be funded to
make the nancing terms viable. Most
banks, as per discussions conducted,
have no xed selection methodology and
rely on the portfolio presented by the
developers. However, certain banks that
have a limited presence in the country
PwC interviewed various leading private
developers of rooftop solar PV in India.
Since the scale of rooftop achieved in
India is around 1 GW, developers do not
have large portfolios. However, with the
increasing availability of low-cost nancing,
developers have a huge portfolio in pipeline.
funds as a challenge. Developers fear
that once the funds are exhausted, the
interest rates might increase, leading
to slow progress in the rooftop sector.
Since the scale of rooftop projects is
small, most developers prefer domestic
nancing and hence domestic nancing
will be costly if no concessional funding
support is extended.
Another challenge that affects the
scale-up of rooftop is the subsidy for
residential and government-owned
buildings. The residential sector has
huge potential, but delay in subsidy
affects the nancials of developers
and results in loss of interest among
residential customers. These delays do
not allow the sector to grow. Subsidies
also make project nancing a challenge,
as most of them are pre-conditioned
to the use of domestic modules, which
puts nancial institutions (international
funding agencies) under the risk of
generation/quality of projects. Thus, the
projects are on hold for a longer duration
and at the same time become costly. This
affects deployment in these sectors.
The aggregator model is the most
preferred model by developers as it
gives them a leverage to procure loans
at reasonable terms by presenting the
portfolio of projects and at the same time
provides a scale to developers which
helps them in procuring materials in
prefer to adopt a xed methodology of
aggregating projects (like specifying
location and size) so that resource cost in
conducting due diligence is saved.
Thus, our discussions reveal that banks
are largely interested in funding/
supporting the rooftop scale-up plans.
However, concessional funding should
be available for them to complete the
nancing terms of other banks and,
at the same time, challenges on PPA
standardisation, etc., should be resolved
at the Central level. Additionally, a few
banks also expressed a huge need for
capacity building/awareness creation
on solar rooftop projects among the
various stakeholders involved, including
DISCOMs, corporates, SMEs, individuals
and lenders. Lastly, banks are seeking
policy and regulatory support from the
government in terms of timely approvals
and clearances of rooftop projects.
bulk at reasonable rates. This model is
expected to lower the cost and make
the system viable for various categories
of consumers. Thus, most developers
nd concessional funding a major
contributor to the growth of rooftop PV
and also envision faster deployment in
the future with these funds available at
reasonablerates.
In terms of business model, most
developers are of the view that there is
no single business model that ts the
requirements of all customers in India,
unlike the case in Germany and the US.
Hence, business models in the Indian
rooftop market need to be customised
based on the needs of the end customers.
These models will keep evolving based
on the changing needs of customers.
Thus, developers also see huge potential
for growth in the rooftop sector.
However, the challenges like design
constraints due to limited roof size
and delays in net metering need to be
addressed to gain the required scale in
the rooftop PV sector, which shall evolve
with increased penetration.