How China Ensured 55 GW Of Rooftop Solar In 2022

The solar industry thrived in India with an addition of about 14 GW in the year 2022. Even so, it fell short of its 2022 solar target of a cumulative 100 GW comprehensively, ending up at 62 GW, with total rooftop solar at barely 7 GW. Meanwhile, in China, with the highest installed capacity and ongoing solar roll out worldwide, a curious change has been taking place. Unlike India, where utility-scale solar had the highest share in installed capacity, the major factor behind China’s performance was rooftop solar installations in 2022.

Rooftop Solar, a Chinese Stratagem

To get its rooftop solar program going, India may learn a lot from the Chinese solar saga of 2022 to make rooftop solar the success it should be.

China installed over 87 GW of new solar capacity in 2022, a growth of over 60 per cent compared to 2021. Around 65 per cent, or 55 GW, came in the form of rooftop solar alone. This is quite opposite of the solar story of India. Out of 14 GW of solar capacity addition in India, the utility scale had a lion’s share with over 11.3 GW added last year.

It makes one wonder – what made China favour rooftop solar over utility scale normal? How is China building so much rooftop solar at such a pace? And, what others, like India, can learn from it?

China’s Rooftop Solar Policy

One intriguing fact about China’s rooftop solar has been that most of the 55 GW installations came from mini 100-200 kW installations on roofs of regular buildings like public buildings (government buildings, schools, hospitals, etc.), commercial & industrial buildings, and also private residences.

Whole-County Rooftop Solar policy is one of the key factors behind the success of rooftop solar in China. Here, solar developers are encouraged to build solar on all the rooftops in a single county together as a package project. When the pilot policy was announced In 2021, analysts estimated that implementation of this policy alone represented 600GW of distributed solar capacity market potential – even with relatively low coverage targets for residential (just around 20 per cent). A county is partnered with a large developer in the PV sector to cover XX% of the rooftops in that county with solar PV by a certain date. targets range from 30% for industrial sectors to 20% for residential areas.

Whole-County projects adopt one of the two models. In the first one, the owners of the rooftops finance the panels themselves and sell the power to the developer. The other option is, the developer leases the rooftop space from the owners and owns the panels themselves.

A Push to Local Developers

Owing to complexities that involve, but are not limited to, an extensive canvassing effort together with local government to identify residents willing to host solar panels, the projects are farmed out to smaller village-level or town-level developers. These local developers take the work of identifying the rooftops, securing project development rights, and ready up and selling their projects up the chain to the Big Developers, often a State Owned Enterprise ( SOE). The local developers work for lower rates of return than these big developers. For public buildings, the state enterprise or municipality owns the panels, selling the power to the rooftop owner when the owner needs it, and otherwise selling to the grid. That requires two contracts – with the rooftop owner and with the grid company.

Another interesting point is that the residential rooftop projects don’t make local developers any money, public buildings do that. However, they still include them as they are required to submit a package tender that includes them too. Targets are set for coverage across all public buildings too, from hospitals, to  schools to administrative buildings.  Thus, by increasing the size of the package on offer manifold, better pricing bids are ensured for their stable returns of around 6.5 to 8% IRR. With 676 counties selected for the rooftop push, that pretty much guarantees a few more years of strong rooftop installations of 40-50 GW plus every year for China.

Way Forward for India

India failed to achieve its solar rooftop target of installing 40 GW, a part of larger total solar capacity addition of 100 GW by 2022. A larger goal of 280 GW solar by 2030 is now the next goal that India must target with renewed sincerity as the current trajectory would result in 86 GW of the shortfall to the target. India’s Rooftop Solar (RTS) subsidy programme has now received a four-year extension till the end of FY-2026. However, there is no increase in the budgetary allocation.

Solar has been at the helm of India’s  energy transition accounting for about 87 per cent of the 16 GW renewable capacity addition last year. It is high time that the country makes amend to its list of priorities and turns its focus to rooftop solar. With their rooftop solar schemes, the Chinese set a perfect example of how this can be done.  While having a single party rule certainly helped, there is no doubt that a well crafted incentives and communications policy in India can achieve much better numbers too.