Why Rooftop Solar Is Turning Into a Mainstream Asset Class in India

The following article is attributed to Ravi Kumar, VP – Business Development, Oorjan Cleantech

Rooftop solar in India has moved decisively from being a niche sustainability initiative to a credible and scalable asset class. What was once adopted primarily by early environmental advocates is now being embraced by households, MSMEs, large corporates, and institutional investors. Falling technology costs, policy certainty, attractive financial returns, and the push for energy independence are collectively driving this shift. Today, rooftop solar is no longer just an energy solution; it is increasingly viewed as a long-term infrastructure investment with predictable returns.

Rooftop Solar Capacity Is Scaling Rapidly

India’s rooftop solar segment has witnessed accelerated growth over the last five years. As of 2024, the country had installed over 16 GW of rooftop solar capacity, compared to less than 5 GW in 2018. According to industry estimates, rooftop solar installations are expected to cross 30 GW by FY 2027, growing at a compound annual growth rate of over 30 percent. This growth is significant within India’s broader renewable energy ambition of achieving 500 GW of non-fossil fuel capacity by 2030. Rooftop solar is emerging as a critical decentralised pillar of this target.

Government Policy Has De-Risked Adoption

Policy intervention has played a decisive role in mainstreaming rooftop solar. The Pradhan Mantri Surya Ghar Muft Bijli Yojana aims to equip one crore households with rooftop solar systems, offering subsidies of up to Rs 78,000 per home. Central Financial Assistance covers up to 60 percent of system cost for smaller installations, significantly reducing upfront capital requirements. Net metering policies across most states allow consumers to export excess power to the grid, improving project viability and shortening payback periods to three to five years in many regions.

Compelling Economics Are Driving Investor Interest

The financial case for rooftop solar has strengthened considerably. The levelised cost of electricity from rooftop systems typically ranges between Rs 3 and Rs 4 per unit, compared to average grid tariffs of Rs 8 to Rs 10 per unit for commercial users in several states. For industrial and commercial consumers, electricity expenses account for 15 to 30 percent of operating costs, making rooftop solar a direct margin enhancer. With system lifespans of 25 years and minimal operating expenses, internal rates of return often exceed 14 to 18 percent.

New Financing Models Are Unlocking Scale

Innovative financing structures have transformed rooftop solar into a bankable asset. OPEX and RESCO models allow developers to install, own, and operate systems while consumers pay only for power consumed. This model has been widely adopted by MSMEs, warehouses, hospitals, and retail chains. Banks and non-banking financial companies have also increased lending to rooftop solar projects, supported by standardised contracts and improved risk assessment frameworks.

Corporate ESG Commitments Are Accelerating Adoption

Corporate demand is another major growth engine. Over 70 percent of India’s rooftop solar capacity is installed in the commercial and industrial segment. Companies are increasingly using rooftop solar to meet ESG commitments, reduce Scope 2 emissions, and strengthen sustainability disclosures. With global investors placing greater emphasis on climate performance, on-site solar assets are becoming a strategic necessity rather than a discretionary expense.

Rooftop Solar Is Creating Jobs and Local Value

Beyond energy savings, rooftop solar delivers broader economic benefits. The sector generates employment across manufacturing, installation, operations, and maintenance. Industry estimates suggest that every megawatt of rooftop solar creates 25 to 30 direct and indirect jobs, supporting local skill development and entrepreneurship.

Conclusion

Rooftop solar in India has evolved into a mainstream asset class supported by strong policy backing, robust economics, diversified financing, and growing corporate and household demand. As adoption deepens across urban and semi-urban India, rooftop solar is set to play a defining role in the country’s energy transition while delivering stable, long-term value to consumers and investors alike.