You know what?
The talk about rooftop solar power being expensive is all bunkum.
And I will show you why.
Let us consider having a rooftop solar power plant. I am considering a grid-tied rooftop solar power plant, a system that does not have a battery included. Why am I not including a battery? Simple – very few, if any medium or large scale rooftop solar installations can afford batteries even if they need them. So, let’s not complicate matters here.
OK, to repeat, we are talking about grid-tied rooftop solar power plant.
All that are required for such a grid-tied solar power plant are solar panels with mounting structure, inverters and the standard electrical cables etc.
Below are the actual costs for putting up a rooftop solar power plant. I have taken a 1 kW solar power plant for illustration. As solar power plants are modular, these data should be the same for any size of solar power plant.
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Total cost of solar power plant is less than Rs 1 lac per kW
Total cost of a 1 kW solar power plant = Rs 87,000, say Rs 90,000 Could there be any replacement costs for such a power plant? Well, yes. While inverters can indeed live for 25 years, we will again conservatively take one replacement for the inverter over the 25 year period. Thus, adding another Rs 10 K to Rs 90,000, you get a round number of Rs 1 lac per kW as the capital cost, almost all of it spent upfront. |
Below are the units a solar power system can generate, in most parts of India. Please note that I am taking approximate numbers for ratings over time, but these numbers are conservative and are less than what a solar power system can actually deliver over 25 years.
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Total units generated per year:
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Notes about the above numbers:
- As mentioned earlier, in fact, I’m being conservative on rated capacities as good quality solar panels have little derating, and have much higher rated capacities than given above. A good quality solar panel at the end of the 25th year will still have over 80% of the rated capacity
- We have been conservative on price as well. A good quality solar power system today can cost even a bit lower than Rs 90,000 per kW, but we have conservatively taken it as Rs. 90,000 per kW
- And, we have not considered accelerated depreciation benefit either, though it is well and truly applicable to solar power plants when used by profitable businesses
- Finally, we have been conservative on capital subsidies – we have taken NO government subsidies in the above calculation
Based on the above table:
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Total number of units generated by 1 kW solar panels over the 25 year period = 30,000 Total capital cost of the 1 kW solar system: Rs 1 lac Total operations and maintenance cost over lifetime: Negligible With all the above, the cost per unit of electricity generated = Rs 1 lac / 30,000 = Rs 3.33 |
Folks, there are no hidden costs that are missing in the above calculations.
If at all anything, we have been conservative.
To satisfy the financial accountant in you who wishes to factor opportunity costs etc., I will generously add another 10% to the cost. Another 30 paise, and that brings it to about Rs 3.6 per unit.
Rs 3.6 per unit of electricity. That is that.
As a commercial or industrial user, you are paying what, Rs. 5.5 per unit to your utility? And surely this will increase to beyond Rs. 6 per unit, pretty soon? If not way beyond Rs. 7 per unit.
Isn’t that plain crazy? Soon, if not already, solar power will cost just half of what you pay to your utility.
If you have not already got what I am driving at, here it is simple and plain
| Solar from your rooftop is cheaper than grid power, right today. Make that goddamned cheaper. |
If someone is telling you otherwise, ask them to show the math. Like I have just shown you.
Check out: EAI Consulting for Solar Energy – Solar PV & Solar Thermal
A good, timely article.. thanks for the info..
But the point that this power is available only during sun shine hours is not mentioned ..!
Also one has to have enough load to consume the possible generated power .. else it all goes waste.. and our Rs.3.6 / KWh calculation may not work..
To avoid the above two .. we may have to add some storage..the popular method being the batteries.. which adds to the cost..
But in my feeling even if we add the cost of storage.. this would be still an affordable cost..
People are ready to buy TVs for lakhs .. whose value goes down every year..unlike the investment on Solar..
Let us hope the general public is made aware of these points..
The author Narsimhan states at the outset this is a grid-tied system, so NO, no power is wasted if not used by your loads, it is inserted into the grid ! Batteries are not required then, however, you may still optionally add those
One major flaw here. While Narsimhan has factored in reducing production, he hasn’t considered the reducing value of money – the Present Value of future money, or conversely, the future value of money invested today, in other words, the opportunity cost of money paid upfront. From a financial perspective, which is what this study aims at, ultimately, it is entirely incorrect to ignore the dropping value of money. If you deposited Rs.1,00,000 in a PPF account and left it there for 25 years @ 8.25% interest, it would ‘grow’ to 6.7 lakhs. If you purchased 30,000 units of power at a flat rate of Rs.5.50 pu, it would cost Rs.1.65 lakhs. It is therefore a little financially fallacious to do these simplistic calculations. At current costs, solar will just not pay for itself in any real sense.
Look at it like this – if you put in Rs 1 lakh into a solar plant and obtained 1400 units a year, which is on the higher side (300 insolation days X 5.5 hrs per day X power factor of 70% (after various attenuations) actually equals 1155 units a year). At Rs.5.5 a unit, it equals about Rs. 6,350. That’s a 6.53% IRR. With a subsidy component of 30%, the IRR works out to about 9%. But you’re unlikely to get the subsidy released without paying a cut to someone.
This is why the solar market hasn’t taken off – If you take a realistic figure of Rs.80,000 per installed KWp and no subsidy, it will give you a return of 7.9%. But most system integrators will not give you this figure of 80,000.
Please call me on 8895493094, or mail me at chlorophyllcs(at)gmail(dot)com if you want to discuss this further.
Sir,
The calculations are not so simple ( though I wish they were). If they were, the market would have responded differently. My observations are as follows:
a) The Cost of Grid-tied inverter is taken as 10K. Pl share which make are these. PCUs by companies like SMA, Refusol and Delta costs 4 to 5 times this price.
b) The generation considered is over 25 years while the payment of 1Lac happens in one go. The time value of money is not considered here. 1 Lacs invested @ 10% Compound Interest will be close to 25 to 30 lacs in 25 years.
c) Any prudent business man will do this math with NPV ( net Present Value). The pay back will not be earlier than 6 to 7 years. That explains why rooftop solar has not taken off in a big way by individual house holds.
regards
Sanjay Kukreja
+91 9818816494
Sir, All calculations accepted..I had installed the iKW solar unit in jan,2013 and had to pay 1.6 lakhs to the company direct..Of course,system is working well and I am using Power supply only for washing machine,pumping motor and fridge..all the rest on solar only..my bi-monthly bill from 1400-1500 has come down to rs.400-500.I would recommend every body to opt for the solar system and thus contribute their might in the power crisis management. .
you should though discount the cost of capital … and some annual maintenance costs..
If you “NPV” the 30,000 kwh to its present value say at 12%, then you probably get about 10,000 units (present value) in total. Then you divide that by the initial investment… then around 8 – 9 / kwh
What PLF you have considered
Good mathmatics so good even to convince those who are poor in it. Iniitial cost is justified as it is used on a long term.
Good to see the numbers explained in a very simple manner. This is definitely an eye opener for many individuals thinking about cost of solar power at source.
Without batteries do you propose that the system will use DC bulbs and appliances? And if you are using inverter then you have to store current in batteries which roughly wear out in 3-5 years.what about maintenance cost?
Please review your observations . 25 years is a long long time. Simple division is just not the answer. Thanks
What you and everyone normally has at home are AC loads and installing Solar PV power does not require you to change to DC. A properly sized solar power system can support all your current loads at home can run off the inverter. Even air-conditioners !Batteries are completely optional and ideally should be avoided. Where the system is grid-tied and the local discom pays for units exported why use battery to store when you can earn on exported units. For more detailed discussion you can contact us at bravosolar.in
U haven’t included the maintenance cost in your assessment. What happens in case of module degradation or replacement required, Cleaning of modules
thanks for such a clear explanation… but i hope the cost for the off the grid system batteries come down as well .
What is the Capacity Utilization Factor (CUF) considered while calculating quantum of units generated in a year?
The interest per year @ 10% is not factored. in the first year itself, it is Rs.10000/-.
Futher the assumption of ,life time of 25 years, is at best, most optimistic; if that is realy so, why not a long (say 10 years) guarantee be given for all structurals , Eletric & Elctronicproducts ,like inverters,TVs,CellPhones,Computers and Audio Systems?
My friend, I appreciate your math. Don’t you think asking 25 years of life from panels that are exposed to all kinds of weather, bird droppings & other maintenance difficulties is a little too much. Pls revise the calc for 10yrs if not an ideal 5yrs and you’ll see how difficult it is to convince urself, leave alone others. We must switch to renewable energy sources…not because they are cheaper…but they are the extra investments for a safe & secure future!! All the best!!
Anyone who thinks that panels will not be exposed to all kinds of weather will be kidding themselves. Yes there will be bird-droppings, dust etc but these are easily washed off with routine maintenance, which is not costly at all. With no moving parts at all, it is quite easy to have long life of 20-25 years. Recent news from Japan confirms solar power plants built in early 90s still going strong after more than 20 years
The indicative price of the inverter is too low as we are not getting grid tie inverters at this price even from china with customs duties included.
can you give the list of manufacturers supplying at this price pl. thanks
Excellent analysis.. this is what i believe. Infact this is what Solar power needs to be sold. GOI is irrationally giving subsidy. Better is to give incentive for exporting electricity at fixed price lets say Rs 4 and give financial loans at priority sector lending rates.
I have written how can we install free solar of 1 MW by shifting 1000 petrol cars to electric cars.
Do you mean I shall get a power from Grid during Night hours or rainy days if grid tied solar system installed …Pls clarify…
What’s missing in this calculations is the cost of money. In commercial establishment I have to borrow & divert ₹1L to buy this equipment & incur interest cost , which has to be added to the overall cost. interest cost will be tapering down.
Conversely present value of future cost ₹3.50 could be even more lower & attractive! Can finance guy crunch the nos?
Vijay Kumar Gupta K IISc1997
Kwality Photonics P Ltd
I fully agree with the above calculations and I had also worked out the same cost but some installers are charging very high rates around Rs.1,25,000/KW Grid connected.
we can provide you solar system with MNRE aproved standards @ above mentioned rates
Not entirely correct, some installers will do for much less. You have to look around. Hint bravosolar.in
Thank you very much for your initiative in promotion of the use of solar energy. Almost all the Indians will tell you that, the electricity generated from solar energy is intermittent and costlier. The promoter of these myths are Petroleum, Coal and Uranium lobby. The solution is joint and well planned efforts by industrialists and entrepreneurs in Renewable energy sector specifically Solar Energy Sector.
The action has already been initiated by Dandakaaranya group of organization in India. Any body interested may contact them, email is:
dandakaaranyan@gmail.com
dear sir,
which company inverter is 10,000.00for ongrid 1kva, emerson 33,000.0, consul, kaco are about to same , donot commit with chinese low quality product, , are sure the panels which you saying will come to 25years, ask the life of backsheet with manufacturer who gives you inthat price, secondary, does inverter comes for 25 years, where is replacement cost, when you post post correct price with good quality product , so itwill beautrifull to customer
where can i find inverter of 1 KW in metioned cost that can work without batteries
why you have not included cost of batteries.
are there occaisions when more power is generated than the rated capacity
;would it not be wise to store the generated power so that makes up for the intermitent nature of this source;it will push the cost up nitilly but may prove worth it in the long run ”your views please;R K WHIG
I think you mean “where more energy is generated than the current load will require”. Yes certainly possible. Since your Solar Power system will be grid-connected any time extra energy is required it will be drawn from the grid. You don’t necessarily require batteries, which only push up the total costs
Hi Dear,
What about the battery replacement cost ?
What about the interest for the Rs. 1 lakh invested ?
Sorry, the given working of cost is seems to be a misconception.
In the above figures the cost of capital ie interest is not considered. If we consider it to be 15% per annum then for 25 years it will be Rs 100000 x 0.15 x 25 / 2 = Rs 187500 (on reducing balance). So the total cost for 25 years will be Rs 100000 + Rs 187500 = Rs 287500 for 30000 units ie the average cost of one unit = Rs 287500 / 30000 = Rs 9.58 per unit.
Besides this, there will be operation & maintenance cost. At the least the panels must be kept clean.
Kindly, clarify if this is wrong.
If you are considering the “cost of capital ie interest”, then wouldnt at the end of 25 years, electricity price also increase as per the inflation to about Rs.15 per unit atleast?
If you use your own money for installation of SPV plant, the interest lost on 1 lakh investment ,( in case we put up the money in bank for 25 years FD) or Return on equity @16% have also to be considered along with capital for calculation of per unit tariff.
If you take loan of 1 lakh from bank/ market for installation of SPV then the total amount to be paid ( interest & principal) is to be taken for calculation of per unit cost tariff from SPV Plant. In case some amount you invest and some is taken from market, the ROE and interest on loan have to be taken into account for calculation of tariff.
This would increase the levelised per unit tariff in the range of Rs 6-8 in place of what you have calculated.
Hi
I wish life is as simple as you mention. Very unfortunate truth is the interest rate. Even if I take 10% on 1 L, the first year cost is 10000, and 1400 units would have costed Rs. 7 per KWhr. That is higher than what we otherwise pay.
Nice catchy presentation – but something that many will not buy,
Bhoo
Inverter cost is taken as very low . we are not able to find a supplier who can sell at 10,000 fairly good ,standard quality unit . Further panel cost is slightly on higher side. In the market suppliers quoting around 1.3 to 1.4
roof top solar how much cost 1Mw,depends on location and area of squre meter ,etc
pl recalculate. no error? It is good to calculate but what @ interest or 7000 units/yr/1 lakh investment
The major factor in your calculation is that the system is grid connected..Which means, by implication that the concerned state has the enabling act and system of buying the rooftop solarpower and also they are willing to buy it as calculated by you.
Correct. This is not such a big deal. Almost all States have finalized and notified grid-interactive net-metering policies to allow Solar Power systems to connect with the grid where they will purchase your spare power. Only a few States remain where policies are not final but are in draft stage soon to be finalized. For instance in Delhi the power purchase rate is Rs 4.14 per unit
in my case where 1600 units are generating and cost is 80,000. the per unit cost is coming around Rs. 2.2/kwh.
for business inquiries . kindly contact +91-9929767707 or amit.s@shakungroup.in
we want to establish new solar power plant at own place so we want to know the expenditure of the plant
we can provide you@85000/KWh with MNRE aproved standards
You have convenently forgotten that a sum of Rs 100000 will grow to 8 lakhs plus in 25 years. Therefore the cost of solar power will be around Rs 28.00
please convince me why i should go for such costly power.
2hp samersabul pump ac detels
i read all of your analysis and would very much like to understand the implications of solar power on a small house as well. say a typical 0.5 kwh load for a small home. also, the practical aspects to go solar in indian states like (gurgaon) haryana.
Who in the market really cares for life cycle costs? Almost all customers demand a payback of about 5 years or less from an alternate investment such as solar,with payback calculated from the savings in their monthly energy bills.Our experience shows that a properly designed grid-tied system with quality components would give a payback of about 6 years(I am assuming government subsidy reimbursement to be a big sham). And then there are very few inverters in the market which would actually last 7-8 years(warrantied maximum for 5 years with hefty additional costs).Even if they are available, that would mean a 3 times replacement over a 25 year period. The GI mounting structures typically used would either need total replacement especially in the coastal areas every 5 years or else fresh coating of GI. Good quality panels for rooftop applications(small quantities from say Canadian Solar) are never sold for less than Rs 43/- per watt.And there are risks taking a call on the future cost movements of energy of fossil fuels.
Agreed. Our experience suggests a break-even period for most customers is closer to 6+ years
I need details for 1 MW PROJECT DETAILS
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Very simply and nicely stated the proposal.only you for got to mention that roof top area required is only 120 sq.ft- the size of your bedroom!
Quite conservative costing indeed- so pl assume atleast Rs. 25000 for the builder. Cheers.
Sir, i want a 2 kw roof top solar system . kindly send a quotation for the same. what the space want for 2 kw roof top solar system .kindly give details for the same by e mail.
I need a 600 va solar inverter with solar pannel how much I want to pay, where I can get, my home earnakulam
I am not convinced that this is really a great idea. My logic is simple. You are incurring 1 Lac as initail cost and in return getting a 1400 units/year of power. This translates to me that you are saving Rs 7000 a year (1400@Rs 5/-). What if you do not install it and use traditional electric supply and put this money in bank fixed deposit. Yow will be getting more than Rs 7000 per year and you can use these to pay your normal bill and enjoy your Rs 1 Lac as it will still be with you/bank.
This could be a better idea if government finance 1 Lac without interest for 25 year and you pay 4000 to government as EMI and then get Rs 7000 worth of electricity.
3 points
1-Power tariffs will keep rising year on year and will beat interest earned
2-Interest rates are expected to get lower once RBI starts moving on those eta next year. Plus you have to account for tax on earnings
3-Yes Rs 1 lakhs in bank is still yours, but then the solar power on your rooftop is also yours
Ideally govt should provide low interest rate to make it easier for customers to fund their solar system purchase. Current capital susbsidy is not the right solution
Yes , I’d like to try it out.But where can you source Solar PV panels,solar inverters,safety devices etc.I would like to do it on my own.Can you give me some leads?Even I’m planning to switch over my lightings to LEDs.I want to buy necessary components and assemble the lights and tube lamps myself.Can you provide me the details of sources for these in Bangalore?Thank you,warm regards,Alexander.
Hey whats the current days cost and where can i get it from ?
can provide you@ 85000/KWh if minimum reqirement upto 25KW
I am interested to work commercially for this application
Good Project but how much practical?
if i need 4Kwh generation. what should be invest?
sir there is a 100 kw solar plant in my college but it gives only 40 percent efficiency……i can not understand that you tell about the rated efficiency ….there is no any machine can give 100% efficiency it is a universal truth. please tell me……
Keeping money in the bank as FD and enjoying RoI (Returns On Investment) at the cost of TDS for interest amount, does not digest for complaining non economical nature of such project.
Then in that case, why people are going for HD TVs (min. Rs. 50,000/-), Smart phones (min. 20,000/-) Luxurious Residential Housing (Rs. ??? Lacs/-) Costlier Outings and Partying…Costly vehicles…… List of wasteful expenses is lot more. Here the RoI is your enjoyment. Is it not? You R paying increasing maintenance amount on your vehicles, Then how you are cautious here about Solar Power Investment?
One thing is sure, that cost of PV panels should be as low as possible, and it will be possible only then when it will be produced in large large quantity. Earlier basic mobile handsets were too costlier. The economics is here. There should be a strong lobby against the anti lobby of conventional energy producers. Bring your product in market in plenty, Offer Govt. subsidy at purchase point it self then see the result. Solar Power is the need of the hour.
Good Luck.
Sir, When you are calculating cost per unit, i think we have to consider RoE, Interest on Debt, O&M. Because industrial or an individual never take make an investment without any return. Correct me if i’m wrong.
The said calculations are for a simple payback.If this is the case then there would have been solar roofs in India. There are many bottlenecks in implementation and getting clearances from the distribution utilities since they are already in huge losses. Many states have come up with net metering framework with lack of clarity in connectivity and grid compliances. As commented by many readers various factors like NPV, Interest, Maintenance and replacement costs are not considered. But, we need to think of energy Independence and a sustainable future. The rooftop models would become feasible and viable with equal participation from government policies implementation through single window clearances and as well as every rooftop owner. The future market would be for solar rooftop leasing and we expect solar will be the future.
supply of home if i need 0.54Kwh generation. what should be invest?
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i want to provide solar power to my house please give me suggestions