While calculating savings from roof top solar solutions…

Thursday, 25 June, 2015

Roof top solar solutions are becoming increasingly popular with the building and house owners. A few thousands of solar installations have already happened in the country. As the prices of solar have significantly reduced while the Distribution Company (discom) or the grid tariffs are further increasing, the solar solutions have become attractive source of electricity.

When evaluating the investment in the roof top solar, the building owner should look at the following parameters –

  • What is the marginal tariff you are paying to the Discom? The tariffs are telescopic in nature many a times implying that the cost of electricity increases as you consume more. So consider the tariff of the last unit that you consume while calculating the savings from solar as the solar generation will reduce that last units of your electricity bill.
  • How many hours of sun light you can get? It will depend on the expected shadow hours in a day on your roof. In National Capital Region and around, one can expect to get a sun light of more than 1500 hours in a year.
  • What is the size of solar solution you can install on your roof? Generally the size should be such selected that the monthly solar generation should not be more than your monthly electricity requirement as per your current bill.
  • Estimate the cost of solar installation. The solar panels and the inverters are the key components used in a roof top solar plant. Many vendors are providing these products and as expected everyone claims their product to be superior to that of others. Unfortunately many fly-by-night operators are making entry into this market.

Other components should also be given due importance as the solar panels are expected to have a life of 25 years plus and these remaining components should also last the same period. Typical cost of solar solution of 10 KW size would be around INR 9.0-10.0 lacs depending upon the quality of installation you select.

  • Will you be eligible for any fiscal incentives like accelerated depreciation? The accelerated depreciation helps to reduce your tax liability as 80% depreciation is allowed on solar investments in the first year itself. Also there is an income tax holiday available on any income earned out of solar generation.

The solar solutions are very reliable source of electricity now. However one needs to select the solution carefully catering to one’s specific requirements. The pay-back period of roof top solar typically varies from 4 years to 8 years depending on the factors listed above. As the solar solutions last for 25 years plus, the returns on these investments are very attractive as there is almost negligible investments in the later years.