India’s Rooftop Solar Potential Stands at 637 GW; PM Surya Ghar, PM-KUSUM Driving Distributed Renewable Energy Growth: IEEFA – Indian PSU

India’s distributed renewable energy sector has witnessed remarkable growth over the past eight years, driven by flagship government initiatives such as PM Surya Ghar Muft Bijli Yojana and Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM), according to a new report released by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report, “Role of Distributed Resources in Energy Transition: A Multi-Country Perspective,” highlights that India possesses an enormous technical rooftop solar potential of 637 gigawatts (GW) while the country’s agricultural sector presents another significant opportunity through the solarisation of more than 29 million irrigation pumps.

Distributed Solar Capacity Jumps Nearly 18 Times

According to the report, India’s distributed energy resource (DER) solar capacity has expanded dramatically from 1.8 GW in FY2018 to 31.5 GW in FY2026, supported by policy incentives, subsidies, concessional financing and innovative business models.

The study notes that implementation through CAPEX, RESCO/OPEX, and utility-led models has broadened participation across urban households, commercial establishments and rural agricultural consumers.

However, despite this rapid expansion, distributed solar’s share in India’s total renewable energy capacity has remained relatively stable at around 21-22%, primarily because utility-scale solar projects have grown even faster during the same period.

Government Schemes Power India’s DER Growth

IEEFA attributes India’s distributed renewable energy success largely to sustained government support.

“In India, DER growth has been driven by two flagship schemes, PM Surya Ghar Muft Bijli Yojana and PM-KUSUM. Backed by diverse business models, including capital expenditure (CAPEX), renewable energy service company (RESCO)/operating expenditure (OPEX), and utility-led implementation models, these schemes have broadened market participation and accelerated DER deployment across urban and rural areas,” said Gaurav Upadhyay, Lead Analyst – Sustainable Finance, IEEFA South Asia and co-author of the report.

The report identifies rooftop solar as the dominant driver of distributed energy growth in India, while also highlighting future opportunities in battery storage, solar irrigation, biogas and vehicle-to-grid (V2G) technologies.

Australia Sets Global Benchmark

The report compares India’s progress with Australia, where distributed energy resources have transformed the electricity sector.

Around 40% of Australian homes now have rooftop solar installations. Rooftop solar contributed over 13% of electricity generation in Australia’s National Electricity Market in 2025, compared to almost negligible levels a decade earlier.

During the same period, coal’s contribution declined from 75% to 52%, while rapid adoption of rooftop solar has frequently pushed wholesale electricity prices close to zero or even negative during daytime hours.

Australia is also witnessing rapid adoption of residential battery storage, with nearly 10 gigawatt-hours (GWh) of battery capacity installed within a year of introducing federal rebates.

“Rooftop solar has reshaped Australia’s grid, cutting deep into coal’s share of generation. Now residential batteries are emerging as the next frontier, with the uptake seen since the launch of the Cheaper Home Batteries Program in July 2025 far exceeding what most forecasts expected,” said Jay Gordon, Energy Finance Analyst, Australian Electricity at IEEFA.

Bangladesh Emerging as New Rooftop Solar Market

The report also highlights Bangladesh’s growing rooftop solar market.

Although official government data places installed rooftop solar capacity at 418 MW, IEEFA estimates actual installed capacity has already reached around 667 MW across 239 industrial establishments and company groups. Including smaller installations below 0.15 MW could raise the total close to 1,000 MW.

The study notes that this expansion has already contributed to a measurable reduction in daytime electricity demand.

According to Shafiqul Alam, Lead Analyst – Bangladesh Energy at IEEFA South Asia, Bangladesh also has enormous potential for solar-powered irrigation, with complete replacement of diesel irrigation pumps potentially adding 4,000 MW of solar capacity while reducing annual diesel imports by around USD 244 million.

Policy Measures Needed

Beyond country-specific findings, IEEFA recommends several policy measures to accelerate distributed renewable energy deployment globally, including:

• Expanding equitable access to rooftop solar.
• Scaling up battery storage alongside solar programmes.
• Accelerating smart meter deployment.
• Simplifying financing for households, farmers and small businesses.
• Streamlining regulatory approvals for distributed energy projects.

The report concludes that while centralised electricity systems will continue to play an important role, distributed energy resources are increasingly proving capable of delivering cleaner, more affordable and resilient electricity systems, with rooftop solar leading the transition across diverse markets.

The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy