India s secret weapon for renewable energy: Rooftop solar for businesses

Rakshith Kunder is adding more solar panels to the roofs of his warehouses. He isn’t seeking to save the planet, it’s pure economics.

“Solar power costs us just a third of grid power and has also reduced our diesel backup cost,” Kunder, 33, said by phone from the city of Kota, in the southern state of Karnataka. His 3 billion rupee ($46 million) fish-meal and oil-products business requires two megawatts of power and he plans to fulfill half of that through solar installations.

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Businesses like Kunder’s are the next target for Prime Minister Narendra Modi’s government as it seeks to achieve 100 gigawatts of solar installations by 2022. Of that, 40 gigawatts is expected to come from rooftop installations.

Small businesses, which contribute about a third to India’s $2 trillion economy, suffer from high power tariffs and erratic supply causing them to fall back on expensive and polluting diesel generators to keep the lights on.

Rooftop solar is the fastest growing segment in renewable energy in India, driven by large customers, according to Bloomberg New Energy Finance research. The contribution of small- and medium-sized companies was limited until recently, said Shantanu Jaiswal, the New Delhi-based research head for BNEF India.

“These companies were constrained by their understanding of technology and the ability to arrange upfront capital but now both these issues are being addressed,” he said.

One company easing the path of small businesses toward a solar future is Bengaluru-based Orb Energy Pvt. It raised $10 million in debt from Overseas Private Investment Corp. in January to provide finance facilities to small businesses seeking to buy a rooftop solar system.