Cost benefit Analysis of a Rooftop Solar System

Installing a rooftop solar system is a long term investment and hence proper prudence and vigilance must be exercised before making the commitment. There are two major costs involved in installing a solar system – installation and maintenance cost. As we already know by now that the results a rooftop system will give depends on the geographic location of the property (latitudinal and longitudinal), the placement of the panels (angular placement) and the types of components used in installing. A house located closer to the equator will receive direct sunlight. Similarly a south-facing roof without trees will receive better solar radiation.

One more thing to keep in mind is the higher your power consumption, the more number of panels and hence a larger rooftop area would be required. But other than these, cost is an important consideration before installing a rooftop system on your house. With prices of solar panels and storage expected to go down even further and with the government support, it is possible for residents to go solar and embrace clean energy. Solar power tariffs could go down to as low as INR 3.5 per unit in just three years’ time. Right now residential rooftop solar makes more economic sense for locations not connected to the grid but if power tariffs go high, a rooftop solar system will be the only viable and intelligent option available for residential consumers.

Cost of a Rooftop solar System

The cost for a typical 1 kW rooftop system is roughly around INR 80,000- 100,000. You can claim a capital subsidy of 30% on the cost. Note Capacity factor is another important parameter to be considered while contemplating the size of your rooftop solar system. It denotes the practical output from a rooftop solar system, which is different from its theoretical output. It approximately ranges in between 10-20%. So a 5 kW system will typically produce 670 kWh annually (5*15%*365 days*24hours). Depending on the power units you consume, you can work out the size of the system to be installed on your property.

The electricity charges are also quite high. Rooftop solar prices have already reached grid parity status with few states like Himachal Pradesh, Assam, Jharkhand, Bihar in India. Rooftop solar prices are infact lower for some states like Maharashtra, Delhi, Tamil Nadu, Karnataka, Telangana, AP, Haryana, UP, Odisha, Punjab, West Bengal, Rajasthan and Kerala, when compared to the commercial tariffs prevalent there. Hence rooftop completely makes sense in these states and that too without accelerated depreciation incentive.

Read about different state policies promoting Rooftop Solar in India.

Image Credit: Bridge to India

Returns from Rooftop Solar system

Rooftop solar makes sense even financially. The electricity tariff is still high in India in the residential segment as well. Installing rooftop is a viable option, because 1 kW rooftop system can roughly generate about 1500-1600 units of power annually. Some of the residential complexes charge around INR 7-8 per unit. You can thus recover your money in 7 years. If you put this money in bank, you earn interest at the rate of 8-10% max. So on the basis of your energy consumption patterns, you should do your calculations.

Image Credit: Bridge to India

The Indian states are promoting rooftop solar not only to fight the alarming issues of power, but also various climate related problems like climate change and global warming. In a recent news, it was announced that the power prices could go up 7.5-8% across the country. This news came in after Coal India announced a price hike by more than 6%, leading the power prices to go up to 7 paise per unit. Though India is already generating surplus power, the major problem today is the transmission of this generated power. In my view the country now needs to focus on this alarming issue at hand, to enable seamless distribution of solar power in its various states.