Replicating Success in Vadodara: Rooftop Solar PPPs in India

September 25, 2014

World Bank Group

  • A pilot solar rooftop PPP launched with IFC support in Gandhinagar, the capital of India’s Gujarat State, is now generating 5 MW of power and saving over 7 million metric tons of greenhouse gas emissions annually.
  • The solar rooftop concept, now proven, is being replicated in five other cities in Gujarat. A 25-year concession to implement Gujarat’s second solar rooftop PPP was signed in Vadodara in June 2014.
  • This model has the potential to be widely replicated in India and other countries through transparent, competitive public-private partnership transactions.

A visitor to Gandhinagar, capital of the Indian state of Gujarat, is likely to notice the glint of the sun reflecting off solar panels on the city’s rooftops. Some sit atop schools, other on hospitals. Many are perched on residential buildings. Altogether, the panels generate about 5 MW of electricity, providing better access to power for an estimated 10,000 people.

The groundbreaking project, a pilot public-private partnership (PPP), attracted approximately $12 million in private financing. Besides adding power generation capacity, it reduces climate emissions by more than seven million metric tons of greenhouse gas emissions annually and complements the 270 MW Gujarat Solar Park, Asia’s largest, in helping the state reach its goal of producing 500 MW annually from renewable sources. 

But the greatest success of Gujarat’s solar rooftop program, playfully referred to as “rent-a-roof project,” lies in its replicability. Launched in 2010 with the help of the IFC, which served as transaction advisor, the project paved the way for a wider rollout of solar rooftop initiatives by working through technical, legislative, and financial issues. Two private firms, Azure Power and SunEdison, each won 25-year concessions to install solar photovoltaic panels on the rooftops of public buildings and private residences and connect them to the grid. 

How the “Rent-A-Roof” Concept Works

Gujarat, a state of 80 million in western India, enjoys about 300 sunny days a year. To harness this energy, private solar companies selected through a competitive bidding process lease rooftop space from government buildings and private residents, who receive Rs 3 ($0.05) per unit produced. The operators are responsible for installing the panels and connecting them to the grid. They in turn receive a feed-in-tariff of Rs 11.21 ($0.18) under a 25-year concession. 

The concept sounds simple. But to make it work, numerous technical issues had to be addressed, including connectivity issues, selecting the solar panel system (e.g. concentrated solar power vs. photovoltaic solar panels), and resolving connectivity issues. The optimal terms of the lease and power purchase agreements also had to be determined in light of existing regulations and business conditions.

But most important was the unambiguous vision for solar power articulated by the state government of Gujarat. As early as 2009, it became the first state in India to announce a solar policy, which included ambitious solar power generation goals and plans to develop its capital as a “solar city.” Gujarat has made significant progress towards its goals. In June 2014, The Times of India reported that Gujarat was already producing 891 MW of solar power and had plans to increase solar capacity by an additional 500 MW in the next three years.  

Replication in Vadodara and Beyond

Vadodara, a city of two million, became the second municipality in Gujarat to adopt the solar rooftop concept. In June 2014, Madhav Solar Private Limited won a 25-year concession for a 5 MW solar rooftop PPP based on the one in Gandhinagar. It is expected to attract $8 million in private investment, provide 9,000 people with better access to power, and reduce greenhouse gas emissions by 6,000 metric tons. 

The Vadodara project clearly benefited from the lessons of Gandhinagar’s solar rooftop PPP experience. Many of the obstacles faced in the pilot project had already been addressed and resolved. The results were proven. Consequently, the Vadodara PPP took less time to implement. 

Buoyed by two important successes, IFC is helping four other cities in Gujarat – Bhavnagar, Mehsana, Rajkot, and Surat – with rooftop solar PPPs of their own. It is also drawing on its experience to improve the policy framework to encourage replication of the concept. 

The solar rooftop concept has excellent prospects for becoming established throughout India.  Cities outside of Gujarat have taken notice; even Delhi is eyeing the model. And Gujarat itself is providing a helping hand to other Indian states: the Gujarat Energy Research and Management Institute (GERMI) will support to the government of Odisha with its own rooftop solar initiatives. Before long, the site of solar panels on Indian rooftops may become so common that visitors stop noticing them.