Rooftop solar players shut shop as going gets tough

The falling margins and tariff pressure have forced Indian EPC rooftop solar players to shut shop over the last six months as they find it difficult to meet their working capital and other operating expenses, industry sources close to the development told FE. Policy decisions from state to retrospectively cancel net metering, and failure to honour the 20% to 30% capital incentives have damaged the viability of many companies that aggressively bid for projects across the country, said sources close to the development.

More than 12 EPC players in the rooftop solar segment have either closed or are on the verge of closing their rooftop solar divisions due to tough financial conditions. Some of the companies facing severe constraints are: Ujjas Energy, Kotak Urja, Relyon Solar, Harsha Abacus, Kirloskar Solar and 8 Minute, among others.

Ketan Mehta, CEO & MD of Rays Power Infra, which also closed down its rooftop solar division, said: “The state governments have failed to maintain continuity in policies, such as cancellation of net metering policy by states like UP, Tamil Nadu and Rajasthan. States are now asking for gross metering, which means paying below the agreed tariff for the surplus power. Besides, there are very few financing options for individuals or SMEs. This has led to investment uncertainties and entry of foreign and risk capital in the sector.” “We have decided to focus on our core business of ground-mounted projects as the rooftop segment does not provide the bandwidth or the margins that we are comfortable with,” Mehta said. Emails or phone calls to other companies and their officials did not elicit any response till the time of going to press.

Rooftop solar was part of the 175 GW renewable target for 2022. However, the segment has failed to live up to the expectations. As of March 30, 2019, India has installed 4,375 MW of rooftop capacity with another 35,625 MW to be installed by 2022. Rahul Dasari, CEO of Sunshot Technologies, said: “Some of the reasons for poor performance of the rooftop solar sector have been non-payment of subsidies by government, which comprises 20% to 30% of the total capital cost, and non-payment of fees by off-takers. Besides, large number of players and lower tariffs have further reduced margins for small players, making the solar projects unsustainable.”

“States like UP have retrospectively cancelled the net metering policy, while Tamil Nadu discom TANGEDCO has not facilitated net metering, CEIG and no objection certificate (NOC) procedures are impacting solar projects in these states,” Dasari said. Under net metering, the developers can supply surplus power to grid. However, state discoms see that as threat to their business.

According to rating agency Icra, the receivable position for wind and solar power IPPs in Andhra Pradesh has worsened to about 8 to 10 months as of June 2019 against less than 4 months as on March 2018, exposing the IPPs in the state to higher credit risks. The rating agency further notes that the importance of honoring the PPAs has been emphasized by the Union ministry of new & renewable energy in the past through advisory directives to the state governments and by the judicial and regulatory authorities through various orders.