India has set an ambitious renewable energy target of 175 GW by 2022, including 100GW of solar power. Of that, the government aims for 60 GW to be utility-scale solar, and the rest to be rooftop solar. Though India has made significant progress on the 60 GW utility-scale solar target, getting to the 40 GW rooftop solar target will be a significant undertaking. As of December 2016, installed capacity of rooftop solar was only ~1.25 GW, which means that ~6 GW would need to be installed every year to reach the 40 GW target by 2022. Filling this gap between the current installment and the 40 GW goal will require an estimated USD 39 billion (INR 3 trillion).
This paper Scaling up Rooftop Solar Power in India: The Potential of Solar Municipal Bonds proposes the use of municipal bonds to support the scale-up of rooftop solar in India, and details how such bonds could be designed and implemented. The adoption of rooftop solar is primarily driven by expected savings in electricity costs, the need for an alternative source of electricity, and the desire to mitigate climate change risk. However, three key barriers hinder the growth of this technology in India: high upfront capital expenditure, perceived performance risk, and limited access to debt capital. To address the first two issues, CPI has previously advocated for a thirdparty financing model.