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.
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, managing director of Rays Power Infra, which has re-strategised its focus on rooftop and is now opportunistically looking at commercial and industrial consumers under resco model, said “The policy uncertainty and reluctance from states to push rooftop segment providing long term clarity to this sector has led to negative sentiments across all stakeholders involved in this sector. Recent orders from states like UP, Tamil Nadu, and Maharashtra has further dampened the growth in this segment. 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.”