The cost of rooftop solar panels may jump 3X as the central government introduces new policy changes aimed at boosting domestic manufacturing while tightening compliance norms for solar installations. The updated framework, effective from June 1, mandates the use of domestically manufactured solar cells for key project categories, significantly impacting installation costs across India.

While the policy strengthens India’s solar manufacturing ecosystem, it is also expected to raise short-term prices for rooftop solar systems.

What Has Changed in the New Solar Policy?

Under the revised rules, solar projects linked to net-metering and open-access systems must now use domestically manufactured solar cells only.

Key highlights include:

• Mandatory use of Indian-made solar cells under the ALMM List-II framework
• Applies to net-metering and open-access solar projects
• Aimed at reducing dependency on imports, especially from China
• Strengthening India’s domestic solar manufacturing ecosystem

This policy shift directly contributes to why the cost of rooftop solar panels may jump 3X in the near term.

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Why Solar Costs Are Expected to Rise

The solar manufacturing chain involves multiple stages, including polysilicon processing, wafer production, cell manufacturing, and final panel assembly. The new rule focuses specifically on the solar cell stage.

Cost impact factors include:

• Imported solar cells currently cost around ₹5/Wp
• Indian-made solar cells cost around ₹12-14/Wp
• Rooftop installations may become ₹3,000 per kW more expensive
• Limited domestic production capacity is creating supply constraints

Experts note that this gap is a major reason for the expected 3X increase in the cost of rooftop solar systems.

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Industry Experts Weigh In

Industry experts highlighted both the short-term challenges and long-term benefits of the policy shift. Hanish Gupta from Sunkind India Ltd noted that domestic solar cell manufacturing is highly capital-intensive, requiring investments of around ₹500 crore per GW and a setup time of 18–24 months, which is likely to keep costs elevated in the near term.

Pawan Kumar Garg of Fujiyama Power Systems stated that although there may be temporary issues related to pricing and supply, the transition will ultimately strengthen India’s self-reliant solar industry and improve long-term energy security.

Meanwhile, Vinay Rustagi of Premier Energies pointed out that the impact will be more significant for corporate projects, as residential solar systems and solar pump installations were already mandated to use domestically produced cells.

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Who Will Be Most Affected?

The policy change does not impact all solar segments equally.

• Corporate and industrial solar projects: Most affected due to ALMM compliance shift
• Residential rooftop systems: Limited impact, as domestic cell usage was already mandatory
• Solar pump installations: Already aligned with domestic manufacturing rules

This means commercial-scale adoption may see the highest near-term cost pressure.

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Long-Term Impact on India’s Solar Sector

Despite rising costs, experts believe the policy is designed to strengthen India’s renewable energy independence.

Expected long-term outcomes:

• Growth in domestic solar cell manufacturing capacity
• Reduced dependence on imported solar components
• Increased job creation in clean energy manufacturing
• Improved energy security and supply chain resilience

Over time, increased competition among domestic manufacturers is expected to stabilize prices.