The Indian government’s PM-SGMBY subsidy scheme for residential rooftop solar has the potential to catalyze an INR 1.2 trillion ecosystem, said SBICAPS in a new report.

It said it expects manufacturers of essential components – including modules, inverters, mounting equipment, and electrical components – to be primary beneficiaries alongside project developers and EPC companies.

Solar module manufacturers face the largest opportunity, valued at INR 480 billion, followed by inverters at INR 275 billion, electric components at INR 200 billion, and mounting structures at INR 90 billion.

The PM-SGMBY offers substantial subsidies that cut payback periods by four to five years. Within 10 months of its launch, the scheme has driven 720,000 installations, a tenfold increase in monthly installation rates.

The report said residential rooftop solar growth could accelerate if net metering benefits extend to sub-1-kW consumers, low-cost financing becomes available, and space limitations are mitigated with high-wattage panels. It also noted that residential PV installations could surpass other rooftop segments if PM-SGMBY achieves its 30 GW target.

As of June 2024, commercial and industrial installations dominated rooftop solar with a 73% share, while residential holds 27%.

However, the report said residential adoption is steadily increasing and will peak in the medium term, bolstered by central government capex policies, high residential tariffs, and favorable net metering in key states.

Non-utility solar installations surged in 2024, contributing 6 GW, or 25%, of the 24.5 GW of solar capacity added during the year. Rooftop solar grew by 4.6 GW, marking a 53% year-on-year increase, while off-grid installations soared 197%.

The SBICAPS report attributed the rising non-utility share to a low base, favorable government policies supporting residential and commercial segments, and improved affordability of distributed solar solutions.

Commercial and industrial (C&I) rooftop PV thrived due to the significant gap between high C&I grid tariffs and lower tariffs available through third-party independent or captive power plants.