How Rooftop Solar Panels Can Alleviate Poverty — Infravisioning With Vinayak Chatterjee

Vinayak Chatterjee speaks on a proposed initiative where the government will subsidise solar rooftop panels for households.

<div class="paragraphs"><p>Representative image. (Source: Unsplash)</p></div>
Representative image. (Source: Unsplash)

Vinayak Chatterjee's Infravisioning video series analyses and explains developments in India’s infrastructure sector to the BQ Prime audience.

Given the ample sunlight available in India, rooftop solar panels or solar photovoltaics can be used to alleviate semi-urban or rural poverty through a proposed initiative, titled Suraj Se Rozgari, according to Vinayak Chatterjee.

"Broadly, a farmer will consume 50% for self-consumption and 50% he can sell to the grid. ... The bottom line is a poor farmer could get anything up to Rs 500-600 a month as income/cash by selling the surplus power from his rooftop or from his courtyard," Chatterjee told BQ Prime. 

In this interview, he shares his thoughts on how there is an opportunity for monetising free sunlight, empowering the poor, providing a very interesting method of direct benefit transfer and creating a class of entrepreneurs.

How Rooftop Solar Panels Can Alleviate Poverty — Infravisioning With Vinayak Chatterjee

Watch the full video here:

Edited excerpts from the interview:

We are going to be talking about what could be potentially a very innovative scheme that will be run, hopefully, if things pan out by the central government, if they take your ideas forward. And that relates to the use of rooftop solar panels or solar photovoltaics to alleviate poverty. You have dubbed this as ‘Suraj Se Rozgari’. What's this all about? 

Vinayak Chatterjee: Since this idea was propagated, it has received tremendous response and traction from anybody who's interested in public policy, poverty alleviation, infrastructure and renewable energy. 

The concept, in fundamental, is simple and a very detailed scheme has been worked out by my colleagues. As you know, I now run the Infravisioning Foundation and we have some very eminent power sector and renewable sector experts, who are distinguished fellows at the Infravisioning foundation. 

So, a few months ago at a round table, we were tossing ideas and it was very clear that over the last few decades, the Indian state has tried to reach out to people at the bottom of the pyramid through a variety of schemes—from subsidy on fertilisers to free electricity to Jan Dhan accounts, direct benefit transfer, water connections, electricity connections, cooking gas cylinders—all of this, to see how the fruits of development could be pushed to people who are relatively less well off. 

And it struck us that funnily enough, one of the most obvious interventions has got missed—which is that across the length and breadth of the country, there is something which is falling free on people's roofs. 

Well, it’s sunlight … even, should I say a farmer with very small acreage of land and living on the margin has a roof over his head, and possibly a courtyard and some barren land around his abode. It seems a shame therefore to allow this free gift of God—free sunlight—falling on the roofs of India's peasantry or agriculture workers or people living in semi-urban and rural areas to go waste. 

It's like having a tap with running water getting wasted. All that sunlight is wasted and it's a simple leap of faith to say, ‘Can’t we, as a society, do something to provide rooftop photovoltaic modules on the rooftops or courtyards of India’s farmers?’ 

And for those who are at the bottom of the pyramid, the state can subsidise the installation of these modules and the relatively better-off can be given subsidies in a graded scale.

Currently, you have the Indian Renewable Energy Development Agency—which has or rather the Ministry of Renewable Energy—has a subsidy running in which 60% of the cost of setting up such a roof module is borne by the household. What you are essentially proposing is that for the bottom of the pyramid i.e. the low-income households, the central government foots the entire bill of setting that up. So how would this work?

Vinayak Chatterjee: See how it works is that we have actually done very detailed calculations of power sector generating costs, installation cost, sale to the different agencies, personal consumption versus excess power sale. We believe that the scheme can be started with about 1 crore low-income households across the country. 

The government has different agencies which do good work. For example, the Solar Energy Corp. or SECI has done stellar work in terms of promoting renewable power stations and allied stuff like smart metering, etc. 

The government also has an agency called IREDA or the Indian Renewable Energy Development Association, which has its arms as its representative state units. This institution can be galvanised to make bulk procurements of modules. Therefore, as the government has shown, bulk procurement reduces prices dramatically as has been seen in the case of LED bulbs or e-buses for public transport in recent times. So, IREDA procures these modules at very favourable rates, passes them on to its state counterpart—who have to gear up their capacity to handle a programme of this size. IREDA does have the capacity because I am not sure what effectively IREDA is challenged with today, so they can take up this additional stack and implement the programme. 

Then, we introduced a class called Rural Developers or district-level developers. The missing link today is that a poor farmer does not have the capacity or ability to interact with the discoms or any module supplier to put stuff on his head and then do net metering—it doesn't have the capacity, so even to maintain it and for the monthly billing, etc. 

So, we are introducing a class called the Rooftop Solar Developers, who effectively become the private sector entrepreneurial businessmen who interfaces between the state and the poor farmers. And these low-cost modules, for at least the bottom of the pyramid households, is handed over in a contract to these developers. They install it and maintain it and they do all the paperwork and paraphernalia and month-to-month billing and payments, etc.  

Broadly, a farmer will consume 50% for self-consumption and 50% he can sell to the grid. So, the bottom line, to keep it very simple because it's a complicated technical subject, the bottom line is a poor farmer could get anything up to Rs 500-600 a month as income/cash by selling the surplus power from his rooftop or from his courtyard. 

Simultaneously, you have created across the length and breadth of rural India or semi-urban India, a class of young technologically-savvy developers who set up small businesses to install and service rooftop solar. So, this is effectively what the government wants today that don't look for government jobs, create businesses where you generate jobs and provide a service. 

So, here is a huge opportunity for monetising free sunlight, empowering the poor, providing a very interesting method of direct benefit transfer and creating a class of entrepreneurs. 

What is the cost approximately of one of these modules and where do we source them from? Is the Indian industry capable of manufacturing so many?

Vinayak Chatterjee: Indian industry is being fostered and encouraged to produce solar modules and there is an import duty advantage that is also being given to make Indian modules competitive. So, there is a section of Indian industry which is largely geared up to make those modules. Therefore, it would provide a fillip to the module-making industry also locally in an Atma Nirbhar sense. So, it fosters a huge volume. 

I don't want to answer the question of modules because my feeling is that in bulk procurement, it is going to be even cheaper than the current price of modules. So, let the market and the tender determine that because I don't want to preempt that pricing decision. 

But the point is that it is such an obvious idea. In a country with so much sunlight, you are actually monetising free sunlight for the poor and giving them a kind of direct benefit transfer. 

I want to understand a few of these modalities as well. Assume that you have 1 crore households that get these solar modules. The power that is generated—half is for personal consumption and half is for feeding to the grid—is this a supply to the grid and buyback and the net effectively is worked out? Is that how this is with solar generation fed directly into the grid?

Vinayak Chatterjee: Not directly, because one of the reasons for the lack of success of the rooftop solar scheme, even with the 60% subsidy, has been the intense reluctance of the discoms to participate and encourage this scheme. They have been pretty lethargic about it and have shown no great inclination for their own reasons, which they think logical, to propagate this scheme.  

So, what we are saying is the responsibility at the central level is IREDA, and it has arms in all the states called the State-level Renewable Development Agencies. So, since SRDA is being asked to or being mandated to run the scheme, what we are saying is the excess power is sold to SRDA. They set up a market mechanism where they get the excess power, the non-consumed power agglomerated at the SRDA. We are saying that we are not depending on discoms as the only monopoly purchaser of power. 

SRDA is then free to contract the sale of the power directly to some large bulk buyers, to the power exchanges, and including the discoms if they are interested. And in our scheme, the discoms should be interested because in our calculations, we have seen to it that the cost of power procurement and the price at which it can be sold to the discoms is very advantageous to the discoms. So, it would be stupid of them to say we do not want it plus it satisfies a lot of renewable obligations the discoms have. 

So, net-net, this is a scheme and going public with this scheme has drawn a lot of excitement. It has strong socio-political implications also because after you have given water, electricity and all of that, what is the next thing you can do to win people's hearts and provide cash in their pockets? Well, it's a very simple answer: free sunlight.

According to your calculations across both low-income households as well as the middle income households, and you have MSMEs across—you are talking about capacity creation of about 20 gigawatts of solar energy. If you say that IREDA is going to be buying this from the consumer, is there going to be a mismatch at any point with regard to demand from the grid? You're saying that this much of supply is being taken by IREDA. But what if there are no buyers, how does this work out in that situation?

Vinayak Chatterjee: It's unlikely that there will be no buyers because the state, the power ministry has mandated that green energy has a special channel, has a special status. 

When the sun is shining, the discoms have a must-buy status. So, what will happen then, of course, if there is excess supply of green energy, the coal fired and traditional fossil fuel generators are asked to back down. When the sun is shining or when the wind is blowing, the discoms and the state load dispatch agencies are mandated to prioritise the purchase of green power. 

So, I do not envisage any situation where the power cannot be sold. That really doesn't arise. It is obvious that it fosters the green energy space. Somehow, our policymakers have missed the boat on this larger picture that it is also a measure of poverty alleviation.

This is, in fact, an initiative that has been taken up by China in order to have poverty alleviation. What are the parallels we can draw from China because we were essentially subtropical and we would technically receive sunlight for more time in the year and therefore, potential for generation of solar power is that much higher.

Vinayak Chatterjee: In terms of a deep dive on China, all that we know now is that the Chinese government has latched on to this topic and prioritised rooftop solar monetisation as one of the top 10 poverty alleviation schemes. That's as much as we know now and we will be doing further research to see how they have managed pricing across the chain, etc. We will come back to you on that later.

The pricing of solar, at this point, is quite attractive when it comes to the comparison between solar/renewable and traditional power? 

Vinayak Chatterjee: Of course, it's very competitive. It's very competitive when you put free modules on the rooftop. You don't really have to calculate the capex cost at all because it's central government that is bearing the cost and it is a differential and the power sale and purchase which gives the surplus—which in some senses, provides the payback for this initial central government free funding, so to say. Therefore, when you factor all of this across the life of 15 years for the scheme, which we have submitted, the net cost to the central government comes to just a shade lower than Rs 20,000 crore. 

Now, just look at the amount we spend Rs 60,000-80,000 crore on so many other kinds of schemes. Here is a scheme which is green, is targeted towards the poor, targeted towards rural India and monetising God's gift to India—which is free sunlight. 

So, I do hope that what we are doing in Infravisioning Foundation is that in the days ahead, we are putting up on the cloud, the very detailed working papers right down to the last paisa of how we envisaged this scheme to work both technically and commercially.  

We are asking for people to send in their comments, their critique, their suggestions, so that it becomes a kind of a mass movement and in some senses puts pressure on the MNRE, the Power Ministry, the state governments and IREDA to actually do something about the suggestion, rather than it being one more suggestion that got published and wished away because we think the power of the idea is very strong and has strong socio-political implications. 

Can you imagine an announcement of this scale saying this is a new scheme by the government called Suraj Se Rozgari, and that across the length and breadth of the farmers of the country, a certain section of the population is going to be seriously benefited by the implementation of this scheme?

So, I just hope that the powers concerned take up the suggestion seriously and if they do, as infrastructure experts, it will make us feel very proud and happy that we have contributed to the new idea and initiative.

(Corrects an earlier version that misstated the number of households that can be initially targeted under the rooftop solar scheme)

Vinayak Chatterjee is founder and managing trustee, The Infravision Foundation; and chairman, CII Mission On Infra, Trade & Investment.

The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.