Why Solar Water Heating Struggles in India Despite Being a Proven Renewable Solution
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Solar water heating is one of the most energy-efficient renewable technologies available. A standard residential system can reduce electricity consumption for water heating by 70–80%, displacing roughly 1,500 kWh per year for a typical household. With system lifetimes exceeding 15–20 years, payback periods often fall within two to four years, even without subsidies.
From a technical standpoint, solar thermal collectors convert sunlight to usable heat at efficiencies exceeding 50%, far higher than solar photovoltaic conversion efficiencies. For a country with high solar irradiation and growing residential energy demand, solar water heating should logically be a mass-market solution.
But despite this strong technical and financial case, solar water heating has failed to achieve mass adoption in India, indicating that the barriers lie not in performance, but elsewhere.
From Early Momentum to Market Stagnation
In the initial years, solar water heating gained momentum, supported by government capital subsidies that encouraged adoption and helped India add close to one million square metres of installed collector area in 2011 alone. This policy support reduced upfront costs and allowed the market to scale across residential, institutional, and commercial segments.
However, this momentum was abruptly disrupted when mounting unpaid subsidy claims and fiscal constraints led to the withdrawal of central subsidies for domestic solar water heaters in 2014. Once this support was removed, households were suddenly required to bear the full system cost, and demand slowed sharply.
How Policy Shifted Consumer Choice Away from Solar Thermal
The withdrawal of support for solar water heating did not occur in isolation. At the same time, government policy began strongly favouring solar photovoltaic systems, particularly rooftop installations. Under national programs, households installing rooftop solar PV can receive subsidies covering 40–60% of system cost, with absolute support reaching ₹70,000–₹80,000 per household.
As a result, consumer decision-making fundamentally changed. Instead of investing in an unsubsidised solar water heater that delivers gradual savings, households increasingly opted for subsidised solar PV systems that offer immediate reductions in electricity bills. Once electricity becomes cheaper or “free,” electric geysers remain in use, indirectly powered by solar electricity rather than replaced by solar thermal.
Market Outcomes: Declining Sales Despite Strong Potential
This policy imbalance directly shaped market outcomes. Solar water heaters were no longer competing with fossil fuels, but with subsidised solar electricity, a competition they were structurally disadvantaged to win.
Consequently, India’s solar thermal market moved into a phase of stagnation after 2021. Annual collector sales have continued to decline in recent years, with installations becoming increasingly concentrated in a limited number of states. Karnataka alone accounts for more than 75% of national installed capacity, driven by mandatory building regulations rather than voluntary consumer choice.
In states without mandates or incentives, adoption remains minimal, reinforcing the conclusion that regulation not technology is the primary determinant of market penetration.
Implementation Gaps: Quality, Awareness, and Weak Last-Mile Execution
Beyond policy design, the decline of solar water heating in India is also driven by persistent implementation and market-structure failures. Limited consumer awareness remains a major barrier, particularly in high-potential regions but awareness, access to credit, and supply-chain strength remain poor. Quality inconsistencies have further eroded trust, with instances of substandard installations, lack of trained technicians, and weak after-sales service leading many systems to fall into disuse once minor faults arise. Although mandatory installation provisions exist in several urban areas, enforcement is uneven, monitoring mechanisms are weak, and dysfunctional systems are often replaced by electric geysers without corrective action.
Additionally, restricted availability of systems in the open market, dependence on state nodal agencies, import dependence for evacuated tubes have increased costs and reduced accessibility. Together, these structural and operational shortcomings have prevented solar water heating from translating technical potential into sustained market adoption, even in regions where demand fundamentals are strong.
Outlook: Policy, Not Technology, Will Decide the Future
Taken together, India’s experience shows that solar water heating did not fail on merit it was sidelined by policy design. Rising electricity tariffs and energy security concerns may slowly improve its economics, but without institutional support, growth is likely to remain limited and uneven.
A revival would require rebalancing incentives through modest capital subsidies, mandatory inclusion in new housing, or integration into national energy-efficiency and decarbonisation programs. Until then, solar water heating will remain a proven but underutilised solution, overshadowed not by superior technology, but by a policy framework that prioritises electricity generation over direct thermal efficiency.
Find out more in our latest edition of India HVAC report.
Source: Aashutosh Chauhan, BRG Research
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