Distributed solar generation is gradually moving to the center of India’s energy transition, driven by a growing shortage of land and grid availability for utility-scale solar plants and a policy push for distributed solar. Applications such as rooftop solar systems (in the residential, commercial, and industrial consumer categories), agrivoltaics (which refers to small-scale solar plants on active farmland), and building-integrated photovoltaics (BIPV) are changing the way solar generation enters the electricity system. Meanwhile, energy storage, digital energy management, and new business models are also growing and changing the way solar assets are operated.

Large solar projects have enabled rapid capacity expansion and economies of scale. This model is here to stay. India’s Central Electricity Authority (CEA), in its National Generation Adequacy Plan for financial year 2026-27 to fiscal 2035-36, has envisaged 509 GW of solar capacity installation by fiscal 2035-36. Large-scale solar still has a vital role to play in this, even as grid limitations slow its growth in many regions.

In fiscal 2025-26, rooftop and agricultural solar installations together accounted for over 36% of total solar capacity additions. But rather than displacing large-scale solar in the longer term, this trend indicates the need for diversification in solar applications, an energy system where distributed resources built close to consumption points meet electricity demand, and large plants connected to transmission grids form the backbone of the national energy network.

Rooftop focus

Residential rooftop solar has most strongly demonstrated the pivotal role of distributed solar in India. The PM Surya Ghar (PMSG) scheme that targets 10 million residential rooftop installations by the end of fiscal 2026-27 had already passed the halfway point of 5 million households by August 2026 – representing a substantial 15 GW capacity increase in just two years.

Further, the “Model Solar Villages” initiative under the PMSG scheme focuses on localized renewable energy systems, with a target of 800 fully solar-powered villages driven by rooftop solar alongside other applications.

Similarly, under its PM-KUSUM scheme to combine solar and agriculture, the Indian government has successfully promoted the uptake of solar-powered water pumps among farmers. The next phase of the scheme is expected to focus more heavily on integrating solar into active farmland, convincing farmers of the business case for this and pushing for total deployments of 10 GW or more. In July 2026, the government also launched its first dedicated scheme for floating solar, PM Surya Sarovar Yojana (PM-SSY), targeting 5 GW of floating solar projects with co-located energy storage systems.

New frontiers

Beyond rooftop solar, India is witnessing increased solar deployment via integration into the built environment and existing infrastructure. The Solar Technology & Application Atlas of India, published by CSTEP, identified more than 300 GW of BIPV potential in existing buildings. India’s urban population is projected to grow to about 600 million by 2031 and 850 million by 2051, indicating a substantial increase in the country’s building stock and associated energy demand. Recognizing BIPV’s potential, India’s National Building Construction Standards 2026 have included BIPV-specific provisions. This could help bring BIPV into the mainstream of both industries by providing developers, architects, and building authorities with a clear framework for integrating solar into building design.

Similarly, solar can be integrated elsewhere in India’s existing infrastructure. Applications like rail/road-integrated PV and canal-top PV have massive potential and have started gaining traction, with factors like land availability, transmission access, and proximity to demand centers increasingly influencing decisions on where new solar systems should be installed.

DG enablers

Residential solar systems deliver their maximum output in the middle of the day, while demand generally peaks later in the afternoon. Commercial and industrial (C&I) solar installations may have different load profiles, but here too, peak generation may not always match demand. High rooftop solar penetration can also result in grid instability, local voltage constraints, and reverse power flows.

As distributed solar expands, batteries become vital for bridging these gaps and providing backup to enhance overall effectiveness. Recent stakeholder consultations on the next phase of the PMSG scheme have emphasized setting up energy storage at the consumer and distribution levels. Making the most of these battery systems once they are installed will be the next challenge. By 2035, storage will need to be equally valued and acknowledged for its many benefits to the grid beyond simply time-shifting solar generation.

The rapid proliferation of distributed generation will require an approach that is markedly different from current approaches to managing centralized generation. Smart inverters, smart meters, digital distributed energy management, and automated demand-response mechanisms would be needed to enable millions of individual assets to operate as coordinated resources.

India has piloted peer-to-peer (P2P) energy trading in a few distribution utilities under its ambitious plan to develop India Energy Stack (IES), a digital public infrastructure initiative for the country’s electricity sector. With the planned national rollout of IES, P2P energy trading could become common by 2035.

Other mechanisms like virtual net metering (VNM) and group net metering (GNM) could also become widely used. Some Indian states have already included these in their policies, and more are expected to follow suit. With successful implementation, more consumers and commercial entities could become distributed solar adopters.

Business models

The role of financing and business models will be crucial to maintain the momentum of distributed solar deployment. The traditional capex model, investing in a privately owned system, does not always work for C&I consumers due to higher upfront costs. Financing mechanisms such as long-term power purchase agreements, operating-expenses-based mechanisms, energy-as-a-service, and other third-party ownership models may be useful in shifting upfront investment and operational responsibilities to specialized service providers. This would be especially useful for solar-plus-storage systems, where the upfront cost is even higher.

The PMSG scheme has already created a space for third-party and utility-led aggregation models to function. Recent consultations have indicated growing interest in solar-as-a-service models, minimum generation guarantees, and operations and maintenance (O&M) aggregation services.

Over the next decade, these kinds of models could become more comprehensive and sophisticated, allowing consumers to acquire not just a physical solar power or battery storage system, but a definite energy outcome, guaranteed renewable energy supply, reduced electricity costs, peak-demand reduction, and energy resilience.

Distribution network

Several changes to India’s distribution system will be needed to fully incorporate the next decade’s focus on distributed solar.

To begin with, interconnection procedures will need to evolve from project-based approvals to more thorough and transparent assessments of actual hosting capacity. For that to happen, distribution utilities will require clarity on where additional solar and storage systems can be connected without causing issues with grid stability, voltage, and safety.

Technical interoperability also needs to be prioritized. For distributed systems to operate as aggregated resources, assets from various manufacturers, such as inverters, meters, and energy dashboards, should be able to communicate with each other seamlessly and reliably.

Steps would also be needed to unify the VNM and GNM mechanisms into an easy-to-implement framework that can be scaled up, while energy storage needs to be treated as more than just a generation accessory and integrated into planning stages. Finally, quality and performance standards for distributed solar systems need to evolve to focus on building systems that are reliable, climate resilient, and can provide a guaranteed generation and service life.

By 2035, distributed solar will become as important as utility-scale solar in India. Both will merge into an integrated ecosystem. A rooftop solar plus storage system, a high-rise building with a BIPV system, an agrivoltaics system, a floating solar system with storage, and a large C&I solar system can all become active components operating simultaneously within a larger electricity system.

With all of these elements, India’s solar story will no longer be defined by gigawatts installed, but by how many of those gigawatts are integrated, flexible, reliable, and useful when the electricity system needs them the most.

The post Distributed outlook appeared first on pv magazine Global.

via pv magazine Global https://ift.tt/nNQW7o0