India has the cheapest solar power in the world, suggests a survey by the International Renewable Energy Agency. Even in the midst of a raging global pandemic, concerns about climate change continue to dominate the headlines. Carbon emissions can be reduced by switching from coal to renewable energy like solar power. In the spirit of doing what you can do, should you install a solar unit on the roof? Let’s find out.

Ownership fees

Buying and installing a rooftop unit and associated components is typically how homeowners or apartment communities generate solar energy. There are various incentives and grants provided by central and state governments to cover the cost of capital. For example, the Ministry of Renewable Energy (MNRE) proposed a grant for rooftop solar power plants under the “Sustainable Rooftop Implementation for Solar Transfiguration of India” (SRISTI) program. States like Tamil Nadu also have similar subsidy schemes. For homeowners, banks provide loans for the installation of solar units, in the home improvement category.

Depending on the available roof area and your budget, you can choose the capacity to install. You can assume that a capacity of 1 KW requires an area of ​​220 square feet. This can potentially produce 5 units per day (with 5-6 hours of sunlight), assuming good solar intensity – which varies by state. For example, in states like Gujarat the intensity is high, compared to others like Himachal Pradesh.

The average price of the panels is around ₹ 35,000 to ₹ 50,000 per KW (depending on the overall capacity). This is about half the cost. Inverters needed to convert DC to AC power, wiring and other components and installation can bring the cost from ₹ 60,000 to ₹ 75,000 per KW. These can be purchased as a kit, along with mobile apps to monitor power production.

The costs, however, increase dramatically if you opt for battery backup – which can be overlooked for grid-connected solutions. MNRE data shows the benchmark cost per Watt is only ₹ 60 for a grid-connected system without a battery, but reaches ₹ 100 if a 6-hour storage battery is added for off-grid use.

Do the math

Your return on investment depends on your cost, your subsidy, and the cost of electricity. Based on the data from the MNRE’s calculator on their website, if we assume ₹ 8 per unit of power, a 1 KW unit would save you around ₹ 12,000 per year. This mitigates 41 tonnes of carbon per year and is equivalent to planting 49 teak trees. If the cost was ₹ 60,000, you can get your return in five years and continue to enjoy it for 20 years or more (the lifespan being around 25 years).

The practical calculation is not that simple and the return is also based on the use case. For example, if you are facing frequent blackouts in your area, a rooftop solar unit can be a good investment, as alternatives such as diesel generators or large capacity inverters to store electricity are available. much more expensive.

However, if there is an electrical grid that is somewhat secure for most times of the day, the main reason for the installation will be to go green and reduce the electricity bill. In this case, the cost reduction depends on the energy policy of your state. For example, some states use gross metering – where you pay normal rates for the energy you use and get paid a lower amount for the energy you produce. In this case, the return on investment tends to be much lower.

Some states like Karnataka have net metering – you are charged the difference between what you use after deducting what you generated. This often gives a better return on investment. Even in these, take into account the different caps on the amount of energy you can export to the grid. In Gujarat, for example, it is capped at 50% of the contractual charge or the sanctioned limit for the first two years of the agreement.

No more warnings

Besides energy policy, the government does not support subsidies for investment costs. For example, Tamil Nadu caps its capacity at 1 KW for a subsidy (₹ 20,000 per kW). There is often a long queue for grants in almost every state, and you should plan to make payment in full.

There can also be delays and onerous procedures to follow to get paid for power generation – completion of the site inspection and installation of net meters by authorities.

If the property is overpriced but you still want to be green, consider renting your patio space to a government or private entity to install the equipment. In return, you get financial benefits. For example, in Kerala, if you go for the utility-owned model, you can get 10 percent of the electricity produced for free. Alternatively, you can buy any amount of electricity produced at a fixed rate.

The author is an independent financial consultant



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