In our previous post, we gave you basic information on how to think about purchasing, installing and financing a rooftop solar system, including cost-benefit analysis.
Today, we’ll take a deep-dive into the economics of rooftop solar systems in Bangalore, Karnataka. Bangalore’s utility BESCOM has implemented a visionary net-metering policy and is executing it in a way that is encouraging all Bangaloreans with roofs to adopt solar. Statistics indicate that the average monthly consumption of electricity in Bangalore is around 90 units per capita. Assuming a 3-4 person household, that works out to 270 – 360 units per month. Per the latest BESCOM tariff schedule, once the fixed charges and FAC are taken into account, the per unit cost works out to almost ₹7 per unit1. The daily power consumption of this household is 9 – 12 units. Their needs can be covered by a rooftop solar system of 3kWp capacity, which would generate about 12 units of electricity daily. To install a system of this size, they would need to have about 300 sqft of usable terrace space (meaning with easy access, and low to no shade).
To get this system up and running, the homeowner has to enter into a power purchase agreement (PPA) with BESCOM under current net-metering policy. Essentially, this means that BESCOM will review and approve your project proposal, subject to certain guidelines. When the installation is complete, the home’s existing electricity meter will be replaced by a bi-directional meter, which can track power sent back to the grid from the solar installation, as well as power drawn from the grid by the household. Once the system is running, the household will receive monthly electricity bills that show net import / export from the grid. If there is a net import (i.e., the household consumed energy from the grid), then the consumer will pay a bill as usual. If there is a net export (i.e., the rooftop solar system produced more electricity than the household used), BESCOM will provide a credit to the consumer’s account within 30 days. The amount of credit will be determined by the prevailing tariff from KERC, as indicated in the PPA. Currently the tariff is significantly higher for solar projects that are installed without government subsidies (₹9.56 per unit for projects without subsidy, vs ₹7.20 for projects with subsidy). Applications for rooftop solar systems can be submitted online, with BESCOM permission coming through in ~7 days. Application forms and complete guidelines can be found on BESCOM’s website, at this link.
Now let’s examine the costs of a solar rooftop system. Today, a 3kWp system would cost about ₹2.9 lakhs. The system cost can be lowered by applying for government subsidies. However, while subsidies are available from Government of India MNRE, they are difficult to get as there is a priority list for approval. MNRE has advised people to set up rooftop projects without waiting for subsidies. Let’s assume that this household decides to purchase and install the rooftop system outright. Their up-front costs would be the cost of the system, and they can sign a PPA (power purchase agreement) with BESCOM at ₹9.56 per unit for 25 years. So their monthly electricity bill would go from ₹1800 – ₹2500 to zero, or net positive, depending on the performance of the system. Taking into account electricity tariff increases (at 5% minimum per year), it can be seen that this is a conservative earnings estimate. Additionally, if more roof space is available, larger capacity systems can be considered to earn more money.
Let’s assume that this household wants to maximize their earning capacity, and also avail financing to get their rooftop solar system up and running. Oorjan (http://www.oorjan.com/) has financing options available for this household (and any other rooftop owner in Bangalore, or anywhere in Karnataka). See the table below for an overview:
As you can see, even a small system would result in net earnings over the life of the project (typically 25 years). Let’s say that this household opts to take a loan and install a 10kWp rooftop solar system. The payoff from this project would look like the below for the first 10 years of project life, depending on the effective per unit tariff for this electricity user.
If you’re in Bangalore and have been thinking about going solar, get in touch with Oorjan (http://oorjan.com), India’s first rooftop solar financing platform. We can help you think through the specifics of your situation. If you already have a price proposal and project design from an installer, send it to us for evaluation and financing. If you are just getting started, we can help you choose a highly rated local installer and obtain financing. Loan approvals for EMI schemes typically take 2-3 weeks, while pay-per-unit agreements take upto 6 weeks. We also provide a user-friendly app to monitor system performance once your project is installed, and provide periodic alerts. Contact us if you have always wanted to go solar, have questions and/or money was in the way!
1 Please note this is a general example, it is best to consult BESCOM billing regarding the specifics of your situation.
This post is a guest contribution by Oorjan Cleantech, a company that enables solar rooftop financing. It is an initiative by Alums of IIT Bombay having years of experience in Solar PhotoVoltaic Markets. They can be contacted at lovesolar@oorjan.com.
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