Understanding Rooftop Solar Policies Across India

Introduction

India, as part of its ambitious goal to achieve 500 GW of non-fossil energy capacity, has set a sub-target of 40 GW specially for rooftop solar (RTS) by 2026. Rooftop solar systems enable homes, businesses, and communities to generate their own electricity, simultaneously reducing energy costs and reliance on traditional power sources. The success of RTS depends on policies that determine how electricity can be generated, shared, or sold back to the grid.

These policies vary widely across India’s 28 states and 8 Union Territories (UTs), differing in terms of permitted solar metering mechanisms, limits on installed capacity, and the accounting methods for surplus solar at the end of a billing period. This blog presents the current RTS policy landscape to help readers understand the variations and opportunities that exist. For a detailed state-wise breakdown, refer to the accompanying infographic table.

Solar Metering Mechanisms Across India: How States Differ

The electricity generated from a RTS can not only power homes or businesses but also allows surplus electricity to be exported to the grid for consumption by other consumers. States policies and regulations differ in the RTS metering mechanism they offer to consumers —net metering, gross metering, and net feed-in/net billing. The RTS metering mechanisms regulate the interaction of the RTS system with the grid and determine the energy accounting approach. Several states provide multiple metering options, allowing consumers to choose depending on their needs and objectives. Net metering is adopted by all the states, though some states restrict participation to specific consumer categories, such as residential or commercial users as is the case in Tamil Nadu for example. Additionally, the maximum size of RTS systems that consumers are allowed under net metering policies differ significantly. For instance, states like Manipur and Mizoram cap installations at 10 kW, while Maharashtra permits systems as large as 5,000 kW, the highest in the country. Gross metering is supported by twenty eight states while nineteen states also allow net feed-in, offering greater flexibility  for consumers who wish to sell surplus electricity at fixed tariffs.

Recognizing that not all consumers have access to individual rooftops due to space or ownership constraints,  18 states and UT’s states have introduced virtual and group net metering. This allows multiple consumers to collectively benefit from shared RTS, making solar energy more accessible and practical for a broader audience.

Sanctioned Load: Restrictions and Flexibility in RTS Adoption

Rooftop solar capacity is typically limited by the sanctioned load, with some states allowing a RTS capacity at 100% of the sanctioned load and others setting lower limits.

Some states like Telangana, Punjab and Tamil Nadu etc, limit RTS capacity at 100% of the consumers sanctioned load, while Gujarat allows unrestricted installation for residential users and MSMEs. Stricter limits have been adopted by Himachal Pradesh (50%), Assam (80%), and Sikkim (40%), while Delhi allows exceeding the limit with additional charges.

Distribution Transformer (DT) Capacity: Managing Grid Integration

While RTS systems can ease the load on distribution transformers (DTs), excess solar energy not absorbed by the building or within the local low-voltage network may flow back, potentially overloading DTs and causing technical issues.

States have therefore set limits on the permissible aggregated RTS capacity that is connected to a single DT, often expressed as a percentage of the DT’s rated capacity ranging from 20% to 100%. For example, Tamil Nadu limits RTS systems connected through high-voltage lines to 70% of the transformer’s capacity under gross metering, while Haryana allows only 50% for low-voltage connections and 30% for high-voltage connections.

Financial Settlements: Balancing Consumer Benefits and Grid Needs 

Once a RTS system starts generating electricity, the timing of financial settlements becomes an important consideration for consumers. Settlements refer to how and when electricity units or payments are adjusted between the consumer and the electricity utility. Different RTS metering mechanisms have their own settlement rules, occurring monthly, quarterly, half yearly, or yearly basis, depending on state policies.

Several states limit compensation for electricity exported beyond 90% of the consumer’s total electricity consumption during the settlement period. In Haryana, surplus solar energy can only be used within the same year, with the limit prorated if the system starts mid-year. Odisha applies a cap of 90% on an annual basis, adjusting for seasonal changes, and Punjab, any solar export exceeding the 90% limit is not compensated, and unused units reset each year. 

Innovative Mechanisms to Boost RTS Adoption: Tariff Incentives, P2P Trading, and Community Solar

States are promoting RTS  adoption through innovative mechanisms like premium tariffs for solar energy export during peak hours as time of use (ToU) tariff, peer-to-peer (P2P) trading, and community solar. Peak hours tariff incentivizes RTS system  owners to export electricity during demand surges or peak hours.  For example, in Tamil Nadu, evening peak hours is compensated at a rate that is 20% higher than the levelized tariff,  while in Tripura, electricity exported under gross metering during the same hours is compensated at 80% of the Average Cost of Supply (ACoS), applicable to High Tension (HT) and Extra High Tension (EHT) systems. 

In addition, peer-to-peer (P2P) trading is being explored through pilot projects in states like Delhi, Karnataka, and Uttar Pradesh which allows prosumers to sell surplus electricity directly to other consumers at agreed tariffs through blockchain platforms, creating a decentralized energy market. Community solar, designed for those without suitable rooftops, is another approach highlighted in Delhi’s renewable energy policy, where participants can subscribe to or invest in collectively owned solar systems located off-site, receiving units or payments based on their share of the electricity generated.

Conclusion

In addition to policies and infrastructure, the contribution of electricity generated from rooftop solar in a state’s total energy mix varies significantly. 

Figure 1: The table below outlines these variations alongside metering mechanisms, RTS capacity limits, sanctioned load, financial settlements, and DT capacity.

To download the above table, click here.

As seen in the table, the RTS policy landscape in India is diverse and evolving, with each state implementing its own regulations and incentives to promote the adoption of solar energy. Despite significant variations in metering systems, sanctioned load limits, and financial settlements, the common goal is to empower consumers, reduce reliance on the grid, and contribute to India’s renewable energy targets. Innovative policies such as ToU tariffs, peer-to-peer trading, and group/virtual net metering are further enhancing the appeal of RTS systems, making rooftop solar energy accessible to a broader range of consumers.