We expect to see robust growth for solar in India in 2022. The year could be the largest yet for solar. Despite prevailing price and supply fluctuations, the demand remains high—from the Government, the private sector, and individuals. As a result, we should see significant capacity addition across all solar segments. There is a push towards solar-wind hybrid projects, and solar for generating green hydrogen in the utility-scale projects. In the distributed segment, industrial clients are targeting to maximise solar capacities as they attempt to get to net-zero. Residential consumers are adopting solar to offset electricity costs and cut down their carbon footprint, and favourable policies, along with subsidies, have led to rapid growth—with a CAGR of 15+% expected over the next five years.

India has committed to going net-zero by 2070 at COP-26. A large part of this commitment is expected to be achieved via maximising our renewable energy generation capacities, driven by solar and wind. With hopes of witnessing record new capacity additions, the government is looking to strengthen the renewable materials supply chain domestically. One of the key programmes revolves around increasing domestic manufacturing capabilities and reducing our dependence on imports. The recently announced production linked incentive (PLI) scheme for solar module manufacturing is a step in this direction. This is a framework that envisages the creation of a fully integrated supply chain, going all the way from polysilicon to quality-driven solar modules.

Along with quality, technology, innovation, and price competitiveness of domestic products will be critical aspects in determining the success of the domestic solar manufacturing ambition. While the proposed Basic Customs Duty on solar imports is meant to give domestic manufacturing a fillip, in the current scenario of high prices and supply chain disruptions, one hopes that it will not hamper the growth of the country’s solar capacity addition or push up the price of electricity.

With the requisite policy support and access to high-quality finance, the solar sector should lead the way in India’s energy transition. Finance options for the distributed segment, including MSMEs and residential consumers, need to be made available. There needs to be a long-term approach to policy, to give both financers as well as consumers the confidence to invest safely. Frequent policy changes and backtracking, especially in the distributed sector has adversely hit growth. One of the major impediments in the rooftop segment has been the negative impact of rooftop solar on the revenues of the Discoms. This has led to many high-potential states reversing policy decisions and imposing restrictions and exorbitant charges on rooftop solar. Unless the Discom issue is addressed on priority, the distributed solar segment will continue to underperform, despite the huge demand from consumers.

Distributed solar is the ideal way forward for a country like India, where despite our size, the land is a precious and expensive commodity. While at a first glance, utility-scale generation may look like the way forward, a closer analysis will reveal that the net delivered price of energy at the point of consumption will perhaps be in favour of distributed generation, which does not require land acquisition, creation of dedicated transmission and distribution infrastructure is free from transmission losses, and has a significantly lower ecological impact.

With the right intervention, Discoms can be made a beneficiary from the growth of rooftop solar in their territories. Affordable storage will be a game-changer for renewable energy generation. It is therefore important that the Discoms begin to participate more actively in rooftop solar generation because it is inevitable that more and more electricity consumers will move towards installing rooftop solar plus battery storage solutions in the future.

As we move towards 2022, we see opportunities unlimited for the solar industry. May be future will be bright and bountiful.

Sanjeev Aggarwal is the MD & CEO of Amplus Solar.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.