How are Solar Policies Enabling Indian Rooftop Solar Programmes?

ISSUE BRIEF

How are Indian States Enabling Rooftop Solar Adoption?

Analysing Subnational Policies and Regulations

11 April, 2025 | Energy Transitions

Arohi Patil, Kumaresh Ramesh, and Bhawna Tyagi

Suggested citation: Patil, Arohi, Kumaresh Ramesh and Bhawna Tyagi. 2025. How are Indian States Enabling Rooftop Solar Adoption? Analysing Subnational Policies and Regulations. New Delhi: Council on Energy, Environment and Water.

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Overview

India targets to install 500 gigawatts (GW) of capacity from non-fossil fuel sources by 2030. The Ministry of New and Renewable Energy (MNRE) aims to install 30 GW of rooftop solar (RTS) capacity by FY 2027. Rooftop solar can play a key role in achieving the 500 GW target, meeting India’s increasing electricity demand and providing affordable and reliable power to all. It can contribute to reducing distribution losses by bringing the point of generation closer to the point of consumption.

As of January 2025, 16.3 GW of RTS was installed, with five states (Gujarat, Maharashtra, Rajasthan, Kerala, and Tamil Nadu) accounting for ~70 per cent of this capacity. In addition to central programmes, the RTS sector is impacted by state policies, regulations, and interventions. Thus, strategic interventions at the state level are needed to accelerate RTS deployment. This issue brief examines the current status of state-level regulatory and policy tools and instruments. It highlights the key learnings and insights for the creation of a conducive ecosystem for accelerating rooftop solar deployments in India.

Figure: India’s rooftop solar progress has varied by state, with top 5 states accounting for 70% of India’s installed RTS capacity

Source: Authors’ analysis based on MNRE (2025)

Key highlights

Most states have adopted the net and gross metering regimes. A few, more progressive states have adopted the net billing, group net metering, and virtual net metering regimes. The state 2 regulations can align metering arrangements and their design with state objectives and market maturity in order to effectively share the economic benefits of RTS.
In terms of the absolute limits on capacity, 24 of 29 state and UT regulations require RTS systems to be bigger than 1 kW, and 21 regulations restrict the size of RTS systems up to 500 kW or 1000 kW. Additionally, individual RTS systems are subject to restrictions based on the consumer’s sanctioned load and DT capacity. For instance, 23 regulations let consumers set up RTS systems up to their sanctioned load, while the remaining allow system oversizing for residential consumers or place differential restrictions based on consumer categories. The DT- level restrictions in states and UTs vary from 15 per cent to 100 per cent.
Figure: System size restrictions, sanctioned load, and DT capacity define capacity limits
Compensation for excess electricity generated by net-metered systems at the end of the settlement period is provided for by 21 of 29 state and UT regulations. The rate of compensation is linked to the discom’s average power purchase cost (APPC) or set by the SERC, or linked to the tariffs discovered in bids for utility-scale solar or RE projects.
Seven of the 30 sub-national renewable energy policies (including rooftop solar) reviewed have been notified in 2023 and 2024. Of the remaining, 15 policies have been notified before 2019. Furthermore, two-thirds of the policies outline the vision and set a clear, time-bound target for the rooftop solar segment.
Figure: State policy notification period varies between 2012 and 2023
A few states financially incentivise end consumers to adopt RTS. Assam, Delhi, Goa, Gujarat, Jharkhand, Uttarakhand, and Uttar Pradesh have provided residential consumers incentives in the form of a capital subsidy. Delhi and Kerala have offered generation-based incentives (GBI).
Delhi, Jharkhand, Karnataka, Uttarakhand, and Uttar Pradesh have introduced novel business models such as community solar and peer-to-peer (P2P) energy trading, supported by enabling regulations, for instance, virtual net metering regulations and guidelines for P2P energy trading.

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Bhawna Tyagi

Programme Lead

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"Rooftop solar provides an opportunity for the states to fastrack their energy transition. States can use policy and regulatory interventions such as economic incentives, innovative business models, and enabling metering regimes. These strategic interventions can work in tandem with national-level initiatives and are needed to accelerate RTS deployment."

Executive summary

India targets to install 500 gigawatts (GW) of capacity from non-fossil fuel sources by 2030. The Ministry of New and Renewable Energy (MNRE) aims to install 30 GW of rooftop solar (RTS) capacity by 2027. Utility-scale deployment dominates the renewables mix, however, rooftop solar is catching up and is expected to play a critical role in achieving the 500 GW target.

Scaling RTS deployment requires a conducive policy and regulatory ecosystem at both state and national levels. Through MNRE’s Grid-connected Rooftop Solar Programme, the Centre has been encouraging the adoption of RTS. Recent initiatives – PM Surya Ghar: Muft Bijli Yojana, New Solar Power Scheme under PM JANMAN, and the 2024 amendment to the Electricity (Rights of Consumers) Rules – have continued the momentum.

Both the central government and state governments have jurisdiction over electricity. Therefore, the RTS sector is impacted by – in addition to central programmes – state policies, regulations, and interventions. States have announced solar policies, and distributed renewable energy (RE) policies that set targets and incentives, along with enabling regulations. Developers, investors, and financing institutions track these policies and regulations to evaluate state-level conduciveness for RTS deployment.

State-level policy and regulatory provisions have been examined (CEEW 2019; TERI and Shakti Energy Foundation 2019; CSE 2023). The ecosystem is evolving continually, however; significant developments have taken place in the past few years; and so, it is important now to not merely tabulate policy and regulatory provisions but analyse their impact on RTS deployment in a state.

In this issue brief we review 30 state policy documents and 29 regulatory documents on grid-connected RTS systems notified till 31 December 2024. We have also reviewed important documents such as the Electricity (Rights of Consumers) Rules, Model Solar Policy, and the guidelines of national RTS schemes and programmes.

Our goal is to answer three questions to help states create an environment conducive for deploying RTS:

How conducive is a state’s regulatory framework for RTS deployment?
How are states progressing in terms of RTS policy provisions?
What are the best practices states have adopted for accelerating RTS deployment?

Key insights

The minimum capacity restrictions for RTS systems limit installation. In 24 of 29 state and UT regulations require that RTS systems have a capacity of 1 kW at minimum. On the other hand, 23 of 29 regulations have a maximum capacity limit of 500–2000 kW. The minimum requirement prevents low-consumption consumers from installing small systems and states from cutting expenditures on electricity subsidies. The maximum requirement may result in undersizing an RTS system, particularly by large commercial and industrial (C&I) consumers.
Most states have adopted the net metering regime¹ or the gross metering regime. A few, more progressive states have adopted the net billing, group net metering, and virtual net metering regimes as well. Net metering, the most common metering regime notified across all states allows consumers to substitute expensive grid electricity and, in some cases, receive compensation for generating excess electricity. Group net metering lets consumers offset electricity consumption in multiple premises. Virtual net metering allows consumers to benefit from systems set up outside their premises. Both regimes have been adopted in twelve regulations. Gross metering is more favourable for discoms and 22 state and UT regulations have adopted the gross metering regime. Net billing benefits both consumers and discoms but only 12 state and UT regulations have adopted it.
States vary in terms of the length of the settlement period and in determining net metering compensation. 21 of 29 state and UT regulations allow annual settlement for residential consumers. 6 state and UT regulations offer monthly settlements. Telangana offers a half-yearly settlement. Compensation for excess electricity generated by net-metered systems at the end of the settlement period is provided for by 21 of 29 state and UT regulations. The rate of compensation is linked to the discom’s average power purchase cost (APPC) in 6 regulations; set by the State Electricity Regulatory Commission (SERC) in 7 regulations; linked to the tariffs discovered in bids for utility-scale solar or RE projects in 5 regulations; and linked to the minimum of two of these methodologies in three regulations.
Some states have recently notified policies outlining their vision for rooftop solar. Policies have been notified by 14 states and UTs between 2019 and 2024; 9 of them notified their policy between 2012 and 2016. Two-thirds of the state and UT policies outline the vision and set a clear, time-bound target for the rooftop solar segment. Assam, Goa, Jharkhand, Sikkim, Uttarakhand, and Uttar Pradesh, more progressive, have set targets by consumer category; 11 states and UTs have specified mandates for residential and government installation; and 4 states have set mandates for C&I consumers as well.
A few states financially incentivise endconsumers to adopt RTS. Assam, Delhi, Goa, Gujarat, Jharkhand, Uttarakhand, and Uttar Pradesh provide residential consumers incentives in the form of a capital subsidy. Delhi and Kerala offer generation-based incentives (GBI). While states generally offer capital subsidies to residential consumers, Goa extends the subsidy to C&I consumers and Uttarakhand to battery storage technologies. A few states and UTs offer electricity duty and tax exemptions.
Some states incentivise RTS adoption through targeted schemes. Chandigarh, Goa, Gujarat, Jharkhand, Kerala, Uttarakhand, and Uttar Pradesh have devised schemes for residential and rural consumers. Most states focus on residential consumers as a group, but Jharkhand and Uttarakhand have proposed schemes dedicated to solarising villages.
State policies address the challenges of enduser financing and the availability of adequate roof area. Jharkhand, Kerala, and Uttarakhand have tasked their state nodal agency (SNA) with developing end-user financing options. Delhi, Jharkhand, Karnataka, Uttarakhand, and Uttar Pradesh have introduced novel business models (community solar, peer-to-peer (P2P) energy trading) supported by enabling regulations (virtual net metering, guidelines for P2P energy trading).
Most states have streamlined processes for implementing policy and monitoring data. Policy in 21 of 30 states and UTs provides for singlewindow clearance for RTS processes; 7 states have also instituted a solar or RTS cell. Delhi, Jharkhand, and Tamil Nadu require their discom to maintain a database of net metering applications and their status.

Recommendations

To strengthen and streamline the grid-connected rooftop solar ecosystem, we recommend the following:

Set clear, time-bound targets to establish the state’s vision for rooftop solar. State policy should set comprehensive, measurable, time-bound targets based on exercises to estimate the technical potential of each consumer segment. These targets should be disaggregated by consumer category. Schemes should be rolled out for each consumer segment (residential; micro, small, and medium enterprises (MSME)). New, upcoming technologies like battery storage systems that enable RTS adoption should be targeted.
Mandate solarisation of government buildings. The state implementation agency can leverage existing mandates to solarise state government buildings. The mandate should be extended to other sectors and new construction. The SNA can ensure that the policy mandates are consistent with building performance standards and thresholds as per state and national building codes (Energy Conservation Building Code, Energy Conservation and Sustainability Building Code).
Standardise RTS installation processes. The state implementation agency should conduct benchmarking exercises and set reasonable timelines for installation, application processing, inspection, and metering.
Create the right set of economic incentives for the consumers. Low- and middle-income households and MSMEs require support to adopt RTS; state energy departments and SNAs should design financial incentives to support them. The SERCs should provide these consumers with longer settlement periods and higher compensation rates.
Align metering arrangement with state objectives. Adopting metering regimes – net metering, gross metering, net billing – will let SERCs effectively share the economic benefits of RTS based on state objectives and market maturity. Where penetration is low, states can offer net metering, with attractive feed-in tariff rates, to incentivise particular consumer segments to adopt RTS. Where the market is mature, states can adopt net billing, with time-of-day tariff rates, to ensure long-term equitable impact for adopters, non-adopters, and discoms.
Enact regulations to enable innovative business models. State implementation agencies (SNAs and SERCs) should coordinate the periodic introduction and amendment of metering regulations to enable the implementation of novel business models (community solar, P2P energy trading). The Ministry of Power (MoP) must ensure that the definitions of these metering regimes are harmonised in line with their guidelines.
Re-evaluate capacity restrictions for RTS systems. The SERCs need to consider relaxing the minimum system capacity restriction of 1 kW for residential consumers. With support from the Central Electricity Authority (CEA) and Forum of Regulators, SERCs need to technically evaluate the restrictions linked to sanctioned load and distribution transformer (DT) capacity and amend those accordingly.
Create a rooftop solar data registry. State implementation agencies and energy departments can maintain a registry for RTS installations and generation. The availability of updated, disaggregated data on installations, metering applications, and electricity generation can assist implementation agencies and policymakers in making better decisions.
Review policy mid-term and course correct if needed. The state and national implementation agencies should conduct a mid-term policy review. The review process should be consultative; it should take stock of the progress (target achievement, metering applications, subsidy disbursal, performance monitoring) and introduce corrective measures where necessary.
Synchronise national and state RTS interventions. State implementation agencies should design policy and regulatory interventions, incentive structures, and schemes to align with and complement national programmes.