India has established a comprehensive national policy for solar energy through the Ministry of New and Renewable Energy (MNRE). This initiative promotes rooftop solar systems and introduces net metering for distributed energy production. Net metering is generally available for systems up to 500 kilowatts, allowing consumers to feed surplus electricity back into the grid and earn credits.

India’s solar journey reveals a stark contrast. While utility-scale solar installations have surged from 2.82 gigawatts in 2014 to over 100 gigawatts today, rooftop solar capacity lags at just 18.84 gigawatts, far short of the 40-gigawatt goal. Residential users account for only 21 percent of installations (MNRE 2025; Mercom India Research 2025).

This gap highlights significant underlying issues. Inconsistent net metering regulations, complicated capproval processes, and hesitant utilities create the “prosumer paradox”—consumers wanting to become producers find themselves trapped in red tape and uncooperative utilities.

Net Metering: The Missing Link

Net metering allows rooftop solar users to feed surplus electricity into the grid, earning credits that reduce bills while democratizing energy access (USAID 2018). Beyond individual savings, properly implemented net metering helps utilities manage peak demand, defer infrastructure investments, and build grid resilience (Tyagi et al. 2024; Rehman et al. 2020).

However, each state implements its own rules, creating a patchwork of regulations and varying levels of cooperation. This inconsistency creates confusion and deters potential investments, preventing net metering benefits from being realized.

Table 1: Different Indian States’ Policies for Solar Net Metering – A Comparative Overview (2025)

Gujarat’s streamlined approval procedures have resulted in 336,000 installations totalling 1,232 megawatts (MNRE 2025). Conversely, stringent caps in Kerala and Goa have deterred investors. Distribution companies often view rooftop solar as a revenue threat rather than a grid modernization opportunity, leading to complex processes and limited support.

Innovation Beyond Traditional Models

India’s urbanization requires creative solar deployment strategies. Building-integrated photovoltaics, including solar siding and photovoltaic windows, enable energy generation in densely populated urban areas where rooftop space is limited (Tyagi et al. 2024). Battery-integrated systems allow homes to maximize solar utilization and provide power during outages (Omar 2025).

Novel financing schemes address affordability concerns. “Solar-as-a-Service” allows homes to access solar energy via service contracts, avoiding large initial investments (USAID 2018). Peer-to-peer blockchain-based marketplaces enable consumers to sell surplus power to neighbours. States such as Karnataka, Delhi, and Kerala are developing regulatory frameworks for these local energy markets (Mercom India Research 2024).

The Lakshmipura-Jharla microgrid project in Rajasthan, operational since 2013, demonstrates how decentralized solar systems can operate independently—utilising local generation and battery storage to reliably supply rural communities. This shows how decentralized systems improve energy access and digital connectivity for small enterprises (ECOINSEE 2013; IDEAS.RePEc 2013).

The National Smart Grid Mission implements advanced metering, artificial intelligence-powered demand forecasting, and seamless grid integration. Artificial intelligence-enabled platforms simplify solar adoption by guiding customers through complex approval processes (McKinsey & Company 2025).

Policy Recommendations

India requires a comprehensive strategy for strengthening net metering and rooftop solar growth:

Standardize Net Metering Rules: A national model policy would establish uniform procedures across states, minimizing confusion and investment risks (Tyagi et al. 2024; Rehman et al. 2020). Today’s fragmented approach creates a “solar coaster” effect, deterring long-term investment (McKinsey & Company 2025). California’s evidence-based transition emphasizes stable, predictable policy regimes (CPUC 2023; Tyagi et al. 2024).

Deploy Digital Platforms: Automated onboarding and approval platforms streamline processes, reduce paperwork, and enhance transparency (McKinsey & Company 2025). India’s PM Surya Ghar portal and the United States SolarAPP+ system demonstrate how technology reduces administrative barriers (MNRE 2024c; SETO 2024c; Tyagi et al. 2024).

Expand Virtual and Group Net Metering: Clear rules for Virtual Net Metering and Group Net Metering address challenges such as restricted roof ownership and high costs for apartment dwellers and renters (USAID 2018; Mercom India Research 2022). United States’ examples, Brazil’s distributed generation policy, and Australia’s community programs show how virtual net metering expands solar access through shared ownership (USAID 2018).

Support Innovative Business Models: Encouraging “solar-as-a-service” models allows families to access solar energy without significant upfront investment. Peer-to-peer trading platforms enable direct energy trading between neighbours (USAID 2018; Mercom India Research 2024). Germany leads with tenant-to-landlord electricity systems and plug-in balcony solar, benefiting renters and space-constrained owners (Tyagi et al. 2024).

Incentivise Smart Integration: Targeted incentives for smart meters and battery storage enhance self-consumption and grid reliability (Omar 2025; McKinsey & Company 2025). Storage devices regulate power flow, minimize losses, and maintain grid stability as solar utilization increases. Battery deployment and smart inverter integration maximize energy flow and grid services (Tyagi et al. 2024).

Launch Awareness Campaigns: Large-scale “Targeted Solar Literacy” campaigns should inform people about the benefits of net metering. Less than 60 percent of residential customers understand net metering, hindering adoption (McKinsey & Company 2025; Rehman et al. 2020). United States Solarize campaigns and India’s PM Surya Ghar portal demonstrate how accessible information builds confidence and accelerates adoption (Tyagi et al. 2024).

Conclusion

India’s rooftop solar potential remains constrained by policy confusion, procedural challenges, and market barriers. By standardizing net metering, embracing digital innovation, and promoting inclusive business models, India can make clean energy more accessible while building a resilient, and sustainable future. Coordinated action across regulatory, technological, and social fronts is essential to close the rooftop gap and unleash the transformative power of distributed solar energy.

References

• CEEW (Council on Energy, Environment and Water). 2025. India’s Energy Transition: Bridging the Policy-Practice Gap. New Delhi: CEEW.
• CPUC. 2023. “Net Energy Metering and Net Billing.” California Public Utilities Commission.
• ECOINSEE. 2013. “Solar Microgrid in Lakshmipura-Jharla: A Case Study.”
• Elsol Power Solutions. 2025. Annual Solar Market Analysis: Trends in Cost and Technology. Internal Report. Pune: Elsol Power Solutions.
• Ideas.repec. 2013. “Decentralized Solar Microgrids: Lessons from Rajasthan.”
• McKinsey & Company. 2025. “Accelerating Distributed Solar Adoption in India.”
• Mercom India Research. 2022. “Virtual Net Metering: Expanding Access to Solar.”
• Mercom India Research. 2024. “Peer-to-Peer Trading Pilots in Indian States.”
• Mercom India Research. 2025. “India Solar Market Update.”
• Ministry of New and Renewable Energy. 2025. “Year-wise Achievements and Physical Progress.”
• Ministry of New and Renewable Energy. 2024c. “Draft Guidelines on Implementation of PM Surya Ghar: Muft Bijli Yojana in Residential Sector.”
• MYSUN. n.d. “Understanding Solar Finance for Homeowners.” Accessed August 19, 2025.
• Omar, Moien A. 2025. “Assessing the Economic Impacts of Net Metering on Residential Solar Photovoltaic Adoption: A Palestinian Case Study.” International Journal of Energy Research, Volume 2025, Article ID 1370101.
• Rehman, S., et al. 2020. “Net Metering Implementation Challenges in India.”
• SETO. 2024c. “Streamlining Solar Permitting with SolarAPP+.” Solar Energy Technologies Office.
• Smart Energy International. 2025. “Grid Modernization in Emerging Economies: The Indian Case Study.” Smart Energy International 3 (Q2): 24-31.
• SolarClue. 2024. Indian Solar Technology Market Report. New Delhi: SolarClue Insights.State regulatory notifications. 2025. Various notifications on net metering and grid connectivity from State Electricity Regulatory Commissions in states such as Maharashtra, Gujarat, and Tamil Nadu.
• Tyagi, S., et al. 2024. “Rooftop Solar Policy and Implementation in India.”
• USAID. 2018. “Net Metering Policies in India: Opportunities and Challenges.”

Ravika Sinha is an alumna of CPPR Academy’s Public Policy Summer Bootcamp 2025 batch. She was mentored by Dr Reetika Syal, Senior Fellow (Governance and Education) at CPPR.

Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research (CPPR).

Ravika Sinha

Deputy Area Manager at LIC Housing Finance | [email protected] |  + postsBio

Ravika Sinha has over 8 years of experience in finance, public policy, research, regulatory compliance, and strategic operations. Currently pursuing a Master's in Economics, Finance, and Public Policy at IIT Kanpur, she specializes in data-driven policy research, digital transformation, and stakeholder engagement. Ravika's expertise in credit risk management and policy implementation at LIC HFL equips her with a strong foundation to contribute insightful analysis and innovative solutions in the public policy domain.

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